Rating Change #3
Northern Trust Corporation
has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- 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 18.1% when compared to the same quarter one year prior, going from $152.00 million to $179.60 million.
- The debt-to-equity ratio is somewhat low, currently at 0.99, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- The gross profit margin for NORTHERN TRUST CORP is currently very high, coming in at 93.10%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.00% is above that of the industry average.
- NORTHERN TRUST CORP has improved earnings per share by 17.7% 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 ($2.92 versus $2.46).
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 18.7, equal to the average banking industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Northern Trust has a market cap of $11.35 billion and is part of the
industry. Shares are up 16.6% year to date as of the close of trading on Thursday.
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