How to Value the NYX
Despite my use of PEG to value this company, I also look at it in practicle terms. For instance, the NASDAQ has a PEG of 1.58 and the CME has a PEG of 1.84. So if the NYX ultimately wants to be a true global exchange combining equities and derivatives (which it kind of is w/the derivative arm of Euronext) why is it trading at a PEG of 1.14?
The NDAQ may deserve a premium due to its ability to gain market share in the US and the level of it efficiency, and CME gets a premium due to its position in derivatives. But why are all the positives ignored from NYX to give it such a low valuation when the company it is becoming is like a combination of NDAQ and CME?
NYX does not need to buy NMX now, nor will it as NMX is going after its own acquisitions for the time being. NYX needs to prove itself to the street, and no better of a time to do that than on Aug 2nd.
If NYX can not pull off good earnings then it is a 2008 story, but until that is seen I still believe it is a 2007 and beyond story.
