Nasdaq, Inc. has delivered strong share price gains over the past few years, which puts a bright spotlight on whether the current valuation is supported by the returns it earns on its capital. With the stock now in a very different place to where it was three years ago, the key issue for you is how much of those returns are already reflected in today's price.
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Nasdaq has returned 114.0% over the past 3 years, so the big question is whether the business is generating a level of returns on its capital that can underpin that kind of share price change.
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Recent board changes, including the planned addition of Börje Ekholm and the year end departure of Holden Spaht, may influence how the company approaches capital allocation and risk, which can affect the sustainability of its returns on invested capital over time.
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Prefer to judge Nasdaq on earnings? See what Nasdaq's 28.5x P/E says about the price .
The issue now is whether Nasdaq's current share price is justified by the returns it earns on the capital entrusted to it by shareholders.
If you want a broader watchlist of companies where return on capital is the starting filter for your research, it can help to run a focused screen such as 29 resilient stocks with low risk scores .
Has Nasdaq Run Too Far on Excess Returns?
The Excess Returns model looks at what Nasdaq earns above its estimated cost of equity on each dollar of shareholder capital. On this view, the group is working from a starting Book Value of $21.49 per share and a Stable EPS estimate of $4.92 per share, both grounded in analyst forecasts. The model applies a Cost of Equity of $1.94 per share, which leaves an Excess Return of $2.98 per share, supported by an Average Return on Equity of 20.68% and a projected Stable Book Value of $23.77 per share.
Those inputs indicate that Nasdaq is estimated to generate returns on equity above its funding cost. However, the Excess Returns projections put Nasdaq's estimated intrinsic value meaningfully below the current share price of $107.12. The recent appointment of Börje Ekholm to the board, combined with a planned director departure, may help explain why investors are willing to pay a premium for potential capital allocation shifts even though the model suggests less upside based on current earnings power. Find out what Nasdaq could be worth using our Excess Returns estimate .
The Nasdaq Narrative: What Would Justify Today's Price?
Nasdaq's valuation puzzle sets up the role of Simply Wall St Narratives, which take the current share price and spell out what future growth, margins and earnings would need to look like for the stock to be worth materially more or less than it is today on the Community page.
Where a single ratio or valuation model leaves you with one number, these scenarios unpack the future that number relies on so you can watch how Nasdaq's actual progress lines up over time.
Nasdaq investors on the Simply Wall St Community are largely aligned that execution has been strong, yet one side sees more left in the story than the other.
Bull case: 6% undervalued
"The broader Financial Technology division, which recorded 15% revenue growth and 16% ARR growth in Q2 2026 with 58 new clients and 107 upsells…"
Discover why this Narrative puts Nasdaq at 6% undervalued .
Bear case: roughly fairly valued
"What every one of them rewarded instead was the boring stuff, not being leveraged past what you could survive, having a plan for how much you were willing to lose…"
Explore why this Narrative puts Nasdaq at roughly fairly valued .
One more piece of the Nasdaq puzzle worth checking
Valuation models only tell part of the story, because the real decisions come from the people in charge and how their pay shapes the risks they are willing to take. See who runs Nasdaq and how they are paid .
This article is general in nature and was produced with the assistance of AI automation, based on data and analysis from Simply Wall St. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include NDAQ .
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