Intrinsic value of Nasdaq - NDAQ

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$68.67

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$68.67

 
Intrinsic value

$119.46

 
Up/down potential

+74%

 
Rating

str. buy

 
Value-price divergence* premium content

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Our model is not good at valuating stocks of financial companies, such as NDAQ.

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of NDAQ stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 11.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.87
  12.50
  11.75
  11.08
  10.47
  9.92
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.35
  7.12
  6.91
  6.72
  6.54
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.44
  5.39
  5.35
Revenue, $m
  3,705
  4,168
  4,658
  5,174
  5,715
  6,282
  6,875
  7,492
  8,136
  8,805
  9,501
  10,225
  10,977
  11,758
  12,570
  13,414
  14,292
  15,205
  16,156
  17,146
  18,177
  19,251
  20,372
  21,541
  22,761
  24,035
  25,366
  26,758
  28,212
  29,733
  31,325
Variable operating expenses, $m
 
  3,209
  3,515
  3,838
  4,177
  4,531
  4,902
  5,288
  5,690
  6,109
  6,544
  6,394
  6,864
  7,353
  7,860
  8,388
  8,937
  9,508
  10,103
  10,722
  11,366
  12,038
  12,739
  13,470
  14,233
  15,030
  15,862
  16,732
  17,642
  18,593
  19,589
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  3,444
  3,209
  3,515
  3,838
  4,177
  4,531
  4,902
  5,288
  5,690
  6,109
  6,544
  6,394
  6,864
  7,353
  7,860
  8,388
  8,937
  9,508
  10,103
  10,722
  11,366
  12,038
  12,739
  13,470
  14,233
  15,030
  15,862
  16,732
  17,642
  18,593
  19,589
Operating income, $m
  261
  959
  1,142
  1,336
  1,539
  1,751
  1,973
  2,204
  2,446
  2,696
  2,957
  3,831
  4,113
  4,405
  4,710
  5,026
  5,355
  5,697
  6,053
  6,424
  6,810
  7,213
  7,633
  8,071
  8,528
  9,005
  9,504
  10,025
  10,570
  11,140
  11,737
EBITDA, $m
  431
  1,644
  1,838
  2,041
  2,255
  2,479
  2,712
  2,956
  3,210
  3,474
  3,749
  4,034
  4,331
  4,639
  4,959
  5,292
  5,639
  5,999
  6,374
  6,765
  7,171
  7,595
  8,037
  8,499
  8,980
  9,483
  10,008
  10,557
  11,131
  11,731
  12,359
Interest expense (income), $m
  119
  144
  188
  235
  283
  334
  388
  444
  502
  563
  626
  691
  760
  831
  904
  981
  1,060
  1,143
  1,229
  1,319
  1,412
  1,509
  1,611
  1,717
  1,827
  1,942
  2,062
  2,188
  2,319
  2,456
  2,599
Earnings before tax, $m
  136
  815
  954
  1,101
  1,255
  1,417
  1,585
  1,761
  1,944
  2,134
  2,331
  3,140
  3,353
  3,575
  3,806
  4,045
  4,295
  4,554
  4,824
  5,105
  5,398
  5,703
  6,022
  6,354
  6,701
  7,063
  7,442
  7,838
  8,252
  8,684
  9,137
Tax expense, $m
  28
  220
  258
  297
  339
  383
  428
  475
  525
  576
  629
  848
  905
  965
  1,027
  1,092
  1,160
  1,230
  1,302
  1,378
  1,457
  1,540
  1,626
  1,716
  1,809
  1,907
  2,009
  2,116
  2,228
  2,345
  2,467
Net income, $m
  108
  595
  696
  804
  916
  1,034
  1,157
  1,285
  1,419
  1,558
  1,702
  2,292
  2,448
  2,610
  2,778
  2,953
  3,135
  3,324
  3,521
  3,727
  3,941
  4,163
  4,396
  4,639
  4,892
  5,156
  5,433
  5,722
  6,024
  6,340
  6,670

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  648
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  14,150
  15,212
  17,000
  18,882
  20,859
  22,928
  25,090
  27,344
  29,693
  32,136
  34,676
  37,317
  40,061
  42,913
  45,877
  48,957
  52,161
  55,494
  58,963
  62,575
  66,338
  70,260
  74,349
  78,616
  83,069
  87,720
  92,578
  97,655
  102,964
  108,516
  114,325
Adjusted assets (=assets-cash), $m
  13,502
  15,212
  17,000
  18,882
  20,859
  22,928
  25,090
  27,344
  29,693
  32,136
  34,676
  37,317
  40,061
  42,913
  45,877
  48,957
  52,161
  55,494
  58,963
  62,575
  66,338
  70,260
  74,349
  78,616
  83,069
  87,720
  92,578
  97,655
  102,964
  108,516
  114,325
Revenue / Adjusted assets
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
Average production assets, $m
  2,208
  2,484
  2,776
  3,084
  3,406
  3,744
  4,097
  4,465
  4,849
  5,248
  5,663
  6,094
  6,542
  7,008
  7,492
  7,995
  8,518
  9,062
  9,629
  10,219
  10,833
  11,474
  12,142
  12,838
  13,566
  14,325
  15,118
  15,948
  16,814
  17,721
  18,670
Working capital, $m
  478
  -192
  -214
  -238
  -263
  -289
  -316
  -345
  -374
  -405
  -437
  -470
  -505
  -541
  -578
  -617
  -657
  -699
  -743
  -789
  -836
  -886
  -937
  -991
  -1,047
  -1,106
  -1,167
  -1,231
  -1,298
  -1,368
  -1,441
Total debt, $m
  3,603
  4,710
  5,865
  7,081
  8,358
  9,695
  11,091
  12,548
  14,064
  15,643
  17,284
  18,990
  20,763
  22,605
  24,519
  26,510
  28,579
  30,732
  32,973
  35,307
  37,737
  40,271
  42,913
  45,669
  48,546
  51,550
  54,688
  57,968
  61,398
  64,985
  68,737
Total liabilities, $m
  8,720
  9,827
  10,982
  12,198
  13,475
  14,812
  16,208
  17,665
  19,181
  20,760
  22,401
  24,107
  25,880
  27,722
  29,636
  31,627
  33,696
  35,849
  38,090
  40,424
  42,854
  45,388
  48,030
  50,786
  53,663
  56,667
  59,805
  63,085
  66,515
  70,102
  73,854
Total equity, $m
  5,430
  5,385
  6,018
  6,684
  7,384
  8,117
  8,882
  9,680
  10,511
  11,376
  12,275
  13,210
  14,182
  15,191
  16,240
  17,331
  18,465
  19,645
  20,873
  22,152
  23,484
  24,872
  26,320
  27,830
  29,406
  31,053
  32,773
  34,570
  36,449
  38,415
  40,471
Total liabilities and equity, $m
  14,150
  15,212
  17,000
  18,882
  20,859
  22,929
  25,090
  27,345
  29,692
  32,136
  34,676
  37,317
  40,062
  42,913
  45,876
  48,958
  52,161
  55,494
  58,963
  62,576
  66,338
  70,260
  74,350
  78,616
  83,069
  87,720
  92,578
  97,655
  102,964
  108,517
  114,325
Debt-to-equity ratio
  0.664
  0.870
  0.970
  1.060
  1.130
  1.190
  1.250
  1.300
  1.340
  1.380
  1.410
  1.440
  1.460
  1.490
  1.510
  1.530
  1.550
  1.560
  1.580
  1.590
  1.610
  1.620
  1.630
  1.640
  1.650
  1.660
  1.670
  1.680
  1.680
  1.690
  1.700
Adjusted equity ratio
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354
  0.354

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  108
  595
  696
  804
  916
  1,034
  1,157
  1,285
  1,419
  1,558
  1,702
  2,292
  2,448
  2,610
  2,778
  2,953
  3,135
  3,324
  3,521
  3,727
  3,941
  4,163
  4,396
  4,639
  4,892
  5,156
  5,433
  5,722
  6,024
  6,340
  6,670
Depreciation, amort., depletion, $m
  170
  686
  695
  705
  716
  728
  739
  752
  764
  778
  791
  203
  218
  234
  250
  266
  284
  302
  321
  341
  361
  382
  405
  428
  452
  477
  504
  532
  560
  591
  622
Funds from operations, $m
  677
  1,280
  1,392
  1,509
  1,633
  1,762
  1,897
  2,037
  2,183
  2,335
  2,493
  2,495
  2,666
  2,843
  3,028
  3,220
  3,419
  3,626
  3,842
  4,067
  4,302
  4,546
  4,801
  5,067
  5,344
  5,634
  5,937
  6,253
  6,584
  6,930
  7,293
Change in working capital, $m
  -45
  -21
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -33
  -35
  -36
  -37
  -39
  -40
  -42
  -44
  -46
  -47
  -49
  -52
  -54
  -56
  -59
  -61
  -64
  -67
  -70
  -73
Cash from operations, $m
  722
  1,550
  1,414
  1,533
  1,658
  1,788
  1,924
  2,065
  2,213
  2,366
  2,525
  2,528
  2,700
  2,879
  3,065
  3,258
  3,459
  3,668
  3,886
  4,113
  4,349
  4,595
  4,852
  5,120
  5,400
  5,692
  5,998
  6,317
  6,651
  7,000
  7,366
Maintenance CAPEX, $m
  0
  -74
  -83
  -93
  -103
  -114
  -125
  -137
  -149
  -162
  -175
  -189
  -203
  -218
  -234
  -250
  -266
  -284
  -302
  -321
  -341
  -361
  -382
  -405
  -428
  -452
  -477
  -504
  -532
  -560
  -591
New CAPEX, $m
  -134
  -277
  -292
  -307
  -323
  -338
  -353
  -368
  -383
  -399
  -415
  -431
  -448
  -466
  -484
  -503
  -523
  -544
  -566
  -590
  -614
  -640
  -668
  -697
  -727
  -759
  -793
  -829
  -867
  -907
  -949
Cash from investing activities, $m
  -1,657
  -351
  -375
  -400
  -426
  -452
  -478
  -505
  -532
  -561
  -590
  -620
  -651
  -684
  -718
  -753
  -789
  -828
  -868
  -911
  -955
  -1,001
  -1,050
  -1,102
  -1,155
  -1,211
  -1,270
  -1,333
  -1,399
  -1,467
  -1,540
Free cash flow, $m
  -935
  1,200
  1,040
  1,133
  1,232
  1,336
  1,446
  1,561
  1,680
  1,805
  1,936
  1,908
  2,049
  2,195
  2,348
  2,505
  2,670
  2,840
  3,018
  3,202
  3,394
  3,594
  3,802
  4,019
  4,245
  4,481
  4,727
  4,984
  5,253
  5,533
  5,826
Issuance/(repayment) of debt, $m
  2,456
  1,107
  1,155
  1,216
  1,277
  1,337
  1,397
  1,456
  1,517
  1,578
  1,641
  1,706
  1,773
  1,842
  1,915
  1,990
  2,070
  2,153
  2,241
  2,333
  2,431
  2,533
  2,642
  2,756
  2,877
  3,004
  3,138
  3,280
  3,429
  3,587
  3,753
Issuance/(repurchase) of shares, $m
  -100
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,202
  1,107
  1,155
  1,216
  1,277
  1,337
  1,397
  1,456
  1,517
  1,578
  1,641
  1,706
  1,773
  1,842
  1,915
  1,990
  2,070
  2,153
  2,241
  2,333
  2,431
  2,533
  2,642
  2,756
  2,877
  3,004
  3,138
  3,280
  3,429
  3,587
  3,753
Total cash flow (excl. dividends), $m
  261
  2,307
  2,194
  2,349
  2,509
  2,673
  2,842
  3,017
  3,197
  3,384
  3,577
  3,614
  3,822
  4,038
  4,262
  4,496
  4,739
  4,993
  5,258
  5,535
  5,825
  6,127
  6,444
  6,775
  7,122
  7,485
  7,865
  8,264
  8,682
  9,120
  9,579
Retained Cash Flow (-), $m
  179
  -603
  -633
  -666
  -700
  -733
  -765
  -798
  -831
  -865
  -899
  -935
  -971
  -1,009
  -1,049
  -1,091
  -1,134
  -1,180
  -1,228
  -1,279
  -1,332
  -1,388
  -1,448
  -1,510
  -1,576
  -1,646
  -1,720
  -1,797
  -1,879
  -1,966
  -2,056
Prev. year cash balance distribution, $m
 
  648
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,352
  1,561
  1,683
  1,809
  1,941
  2,077
  2,219
  2,366
  2,519
  2,677
  2,679
  2,850
  3,028
  3,213
  3,405
  3,605
  3,813
  4,030
  4,257
  4,493
  4,739
  4,996
  5,265
  5,545
  5,839
  6,146
  6,467
  6,803
  7,154
  7,523
Discount rate, %
 
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
  25.93
PV of cash for distribution, $m
 
  2,212
  1,374
  1,376
  1,365
  1,342
  1,306
  1,258
  1,199
  1,131
  1,054
  915
  835
  752
  667
  584
  503
  427
  356
  291
  234
  184
  142
  108
  79
  57
  40
  28
  18
  12
  7
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Nasdaq, Inc. provides trading, clearing, exchange technology, regulatory, securities listing, information, and public company services worldwide. It operates in four segments: Market Services, Listing Services, Information Services, and Technology Solutions. The Market Services segment offers equity derivative trading and clearing; cash equity trading; fixed income, currency, and commodities trading and clearing; and access and broker services. This segment operates various exchanges and other marketplace facilities across various asset classes, including derivatives, commodities, cash equity, debt, structured products, and exchange traded products; and provides clearing, settlement, and central depository services, as well as offers transaction-based platforms. The Listing Services segment operates various listing platforms, which offer capital raising solutions for private and public companies. Its primary listing markets include The NASDAQ Stock Market, and the Nasdaq Nordic and Nasdaq Baltic exchanges. The Information Services segment sells and distributes historical and real-time quote and trade information to market participants and data distributors; and develops and licenses Nasdaq branded indexes, associated derivatives, and financial products, as well as provides custom calculation services for third-party clients. The Technology Solutions segment offers corporate solutions in investor relations, public relations, multimedia solutions, and governance. It also provides technology solutions for trading, clearing, settlement, surveillance, and information dissemination; facility management and systems integration, and advisory services; and broker services, as well as enterprise governance, risk management, and compliance software and services. The company was formerly known as The NASDAQ OMX Group, Inc. and changed its name to Nasdaq, Inc. in September 2015. Nasdaq, Inc. was founded in 1971 and is headquartered in New York, New York.

FINANCIAL RATIOS  of  Nasdaq (NDAQ)

Valuation Ratios
P/E Ratio 105.9
Price to Sales 3.1
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 15.8
Price to Free Cash Flow 19.5
Growth Rates
Sales Growth Rate 8.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0.8%
Cap. Spend. - 3 Yr. Gr. Rate 3.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0.9
LT Debt to Equity 66.4%
Total Debt to Equity 66.4%
Interest Coverage 2
Management Effectiveness
Return On Assets 1.6%
Ret/ On Assets - 3 Yr. Avg. 3.2%
Return On Total Capital 1.3%
Ret/ On T. Cap. - 3 Yr. Avg. 3.8%
Return On Equity 2%
Return On Equity - 3 Yr. Avg. 5.5%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 61.5%
Gross Margin - 3 Yr. Avg. 60.6%
EBITDA Margin 11.5%
EBITDA Margin - 3 Yr. Avg. 20.4%
Operating Margin 7%
Oper. Margin - 3 Yr. Avg. 16.1%
Pre-Tax Margin 3.7%
Pre-Tax Margin - 3 Yr. Avg. 13.1%
Net Profit Margin 2.9%
Net Profit Margin - 3 Yr. Avg. 9.1%
Effective Tax Rate 20.6%
Eff/ Tax Rate - 3 Yr. Avg. 27.8%
Payout Ratio 185.2%

NDAQ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NDAQ stock intrinsic value calculation we used $3705 million for the last fiscal year's total revenue generated by Nasdaq. The default revenue input number comes from 2016 income statement of Nasdaq. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our NDAQ stock valuation model: a) initial revenue growth rate of 12.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.3%, whose default value for NDAQ is calculated based on our internal credit rating of Nasdaq, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Nasdaq.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of NDAQ stock the variable cost ratio is equal to 78.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for NDAQ stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4% for Nasdaq.

Corporate tax rate of 27% is the nominal tax rate for Nasdaq. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the NDAQ stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for NDAQ are equal to 59.6%.

Life of production assets of 46.6 years is the average useful life of capital assets used in Nasdaq operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for NDAQ is equal to -4.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $5430 million for Nasdaq - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 166.307 million for Nasdaq is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Nasdaq at the current share price and the inputted number of shares is $11.4 billion.


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Stock chart of NDAQ Financial statements of NDAQ
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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