Rating Change #8
Northern Trust Corporation (NTRS) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 22.9%. Since the same quarter one year prior, revenues slightly increased by 3.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Capital Markets industry average. The net income increased by 6.8% when compared to the same quarter one year prior, going from $151.00 million to $161.20 million.
- NORTHERN TRUST CORP has improved earnings per share by 8.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NORTHERN TRUST CORP reported lower earnings of $2.46 versus $2.74 in the prior year. This year, the market expects an improvement in earnings ($2.97 versus $2.46).
- NTRS has underperformed the S&P 500 Index, declining 11.56% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Capital Markets industry and the overall market, NORTHERN TRUST CORP's return on equity is below that of both the industry average and the S&P 500.
Northern Trust Corporation, through its subsidiaries, provides asset servicing, fund administration, asset management, and fiduciary and banking solutions for corporations, institutions, families, and individuals worldwide. The company has a P/E ratio of 17.4, equal to the average banking industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Northern Trust has a market cap of $10.6 billion and is part of the financial sector and banking industry. Shares are up 10.8% year to date as of the close of trading on Thursday.You can view the full Northern Trust Ratings Report or get investment ideas from our investment research center.