NYSE Euronext (NYX) has struggled as revenue and EPS are expected to fall this year and macro trends have been week. However, 2013 should be a different story and growth should resume with analysts expecting EPS growth of over 25% year/year to an EPS figure of $2.78, up from $2.20 in FY12. With it being undervalued on all metrics the stock makes a compelling buy here.
The company hasn't been standing still and is making progress on all fronts. In its Q1 results, the company stated, "Despite the tough quarter, we are executing our earnings growth strategy. This quarter we made progress with the build-out of clearing, reduced our shares outstanding, unwound NYSE Blue and reported lower costs. These efforts will provide greater operating leverage when macro trends return to more historical norms." Below is an in depth look at the valuation metrics and stock chart.
Valuation: NYSE Euronext's trailing 5-year valuation metrics suggest that the stock is undervalued as all of the metrics are below their respective 5-year averages. NYSE Euronext's current P/B ratio is 1 and it has averaged 1.3 over the past 5 years with a high of 2.5 and low of 0.7. NYSE Euronext's current P/S ratio is 1.6 and it has averaged 3.6 over the past 5 years with a high of 6.4 and low of 1.6. NYSE Euronext's current P/E ratio is 11.6 and it has averaged 20.1 over the past 5 years with a high of 41.4 and low of 9.5.
Price Target: The consensus price target for the analysts who follow NYSE Euronext is $31. That is upside of 24% from today's stock price of $24.5 and suggests that the stock is a bit undervalued at these levels.
Forward Valuation: NYSE Euronext is currently trading at about $25 a share with analysts expecting EPS of $2.8 next year, an earnings increase of 26% y/y, for a forward P/E ratio of 8.8. Taking a look at the company's publicly traded comparisons will give us a better idea of the stock's relative valuation. NASDAQ (NDAQ) is currently trading at about $22 a share with analysts expecting EPS of $2.99 next year, an earnings increase of 15% y/y, for a forward P/E ratio of 7.3. CME Group (CME) is currently trading at about $256 a share with analysts expecting EPS of $18.97 next year, an earnings increase of 16% y/y, for a forward P/E ratio of 13.5. IntercontinentalExchange (ICE) is currently trading at about $124 a share with analysts expecting EPS of $8.8 next year, an earnings increase of 12% y/y, for a forward P/E ratio of 14.1. The mean forward P/E of NYSE Euronext's competitors is 11.6, which suggests that NYSE Euronext is undervalued relative to its publicly traded competitors.
Earnings Estimates: NYSE Euronext has beat EPS estimates 3 times in the past 4 quarters. The company's EPS figures have come in between -1 cents and 2 cents from consensus estimates or about -2.1% to 4.2% from analyst estimates. The company's earnings come relatively close to consensus estimates, which suggests that analysts are good at projecting the company's results and share upside from earnings surprises will be limited.
Price Action: NYSE Euronext is down 30.1% over the past year, underperforming the S&P 500, which is up 2.2%. Looking at the technicals, the stock is currently below its 50-day moving average, which sits at $27.24 and below its 200-day moving average, which sits at $26.76.