Regions: Earnings Winner

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State Street

Shares of State Street (STT) of Boston rose 3.5% to close at $55.25.

The company on Friday reported fourth-quarter operating earnings available to common shareholders of $521 million, or $1.11 a share, increasing from $473 million, or 99 cents a share, in the third quarter, and $454 million, or 93 cents a share, in the fourth quarter of 2011. The adjusted fourth-quarter earnings excluded $139 million in acquisition and restructuring costs, mainly related to the reduction of 630 staff positions, which will be completed this year.

Highlights for the quarter included $260 million in investment management fees, increasing 4% sequentially and 29% year-over-year, ""primarily due to stronger equity markets, net new business, and higher performance fees." Please see TheStreet's earnings coverage for more detail on State Street's fourth-quarter results.

Guggenheim analyst Marty Mosby rates State Street a "Buy," with a $57 price target, and on Tuesday said that "as the operating environment stabilizes going into 2013, revenue growth should continue; furthermore, positive efficiencies should continue to build and excess capital should be deployed through either share repurchases or acquisitions."

"As a result, we expect STT to be able to grow operating earnings per share by about 10% in 2013 and improve operating return on tangible common equity back toward 18%."

State Street's shares have already risen 18% year-to-date, following a 19% return during 2012.

The shares trade for 12.6 times the consensus 2013 EPS estimate of $4.38. The consensus 2014 EPS estimate is $4.98.

Based on a quarterly payout of 24 cents, the shares have a dividend yield of 1.74%.

Interested in more on State Street? See TheStreet Ratings' report card for this stock.

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-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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