Nasdaq, Inc.NDAQNASDAQ

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DCF Valuation

DCF Valuation Summary

Strong Sell

Fair Value: $42.38 per share(market-calibrated)

-51.5%

Upside to Fair Value

Current

$87.42

Pure Model

$37.92

Fair Value

$42.38

Bull Case

$43.05

Bear Case

$31.96

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

5.25%

Calibrated Growth

3.46%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $37.92.

What's Driving This Ratingfor NDAQ

↓

CapEx normalizing toward maintenance

Historical CapEx is 2.30% of revenue (heavy investment phase). Model fades this to 1.50% by Year 10, freeing up ~$66M in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 27.31% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects -30.56% revenue growth, fading to 2.50% by Year 10. Revenue reaches $8.2B (vs $8.2B today).

🎯

Market pricing in higher long-term growth

To justify $87.42, the market implies 5.25% perpetual growth — 275bps above the model's 2.50%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 81.20% indicates efficient cash generation. FCF reaches $2.2B by Year 10 (26.71% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.02

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.11%

Cost of Debt

Pre-tax Cost of Debt0.18%

Tax Rate16.60%

After-tax Cost of Debt0.15%

Equity Weight (E/V)83.40%

Debt Weight (D/V)16.60%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (83.40% × 9.11%) + (16.60% × 0.15%)

= 7.62%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$5.7B	$6.7B	$7.2B	$7.6B	$8.2B
EBIT	$1.6B	$1.8B	$2.0B	$2.1B	$2.3B
Tax	$259M	$302M	$328M	$347M	$377M
NOPAT	$1.3B	$1.5B	$1.6B	$1.7B	$1.9B
+ Depreciation	$292M	$341M	$370M	$389M	$419M
- Capex	$131M	$142M	$141M	$134M	$123M
- Δ NWC	-$75M	$15M	$5M	$5M	$6M
Free Cash Flow	$1.5B	$1.7B	$1.9B	$2.0B	$2.2B
Discount Factor	0.929	0.802	0.693	0.598	0.480
Present Value	$1.4B	$1.4B	$1.3B	$1.2B	$1.0B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$2.2B

Terminal Growth Rate2.50%

WACC7.62%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$43.7B

PV of Terminal Value$21.0B

Exit Multiple Method

Year 10 EBITDA$2.7B

Exit Multiple (EV/EBITDA)12.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$32.3B

PV of Terminal Value$15.5B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$12.5B

PV of Terminal Value$21.0B

Enterprise Value$33.5B

(-) Net Debt$9.1B

Equity Value$24.4B

Shares Outstanding571M

Price per Share$42.73

Exit Multiple Method

PV of Projected FCFs$12.5B

PV of Terminal Value$15.5B

Enterprise Value$28.0B

(-) Net Debt$9.1B

Equity Value$18.9B

Shares Outstanding571M

Price per Share$33.11

Pure Model Fair Value

$37.92

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
5.62%	$51.91	$55.83	$61.01	$68.16	$78.68
6.62%	$41.95	$44.22	$47.04	$50.64	$55.40
7.62%	$34.76	$36.20	$37.92	$40.00	$42.60
8.62%	$29.24	$30.21	$31.33	$32.65	$34.23
9.62%	$24.82	$25.49	$26.26	$27.15	$28.19

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$31.96

-63.4% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.28

Base Case

$37.92

-56.6% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 1.02

Bull Case

$43.05

-50.7% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.87

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Financial Services Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-30.56%

Year 3 Revenue Growth7.90%

Year 5 Revenue Growth2.46%

Year 7 Revenue Growth2.48%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin27.31%

Terminal EBIT Margin28.36%

Tax Rate16.60%

Historical Capex / Rev2.30%

Terminal Capex / Rev1.50%

NWC / Revenue2.99%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 12x EV/EBITDA (Financial Services sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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