NEW YORK (
-- State Street Corporation
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- Despite the current debt-to-equity ratio of 1.53, it is still below the industry average, suggesting that this level of debt is acceptable within the Capital Markets industry.
- STATE STREET CORP's earnings per share declined by 6.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, STATE STREET CORP reported lower earnings of $3.08 versus $3.47 in the prior year. This year, the market expects an improvement in earnings ($3.75 versus $3.08).
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The gross profit margin for STATE STREET CORP is currently very high, coming in at 93.80%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.70% is above that of the industry average.
- STT's revenue growth has slightly outpaced the industry average of 2.8%. Since the same quarter one year prior, revenues slightly increased by 0.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
State Street Corporation, through its subsidiaries, provides various products and services for the institutional investors worldwide. The company has a P/E ratio of 15.5, equal to the average banking industry P/E ratio and below the S&P 500 P/E ratio of 17.7. State Street has a market cap of $23.7 billion and is part of the
industry. Shares are up 2.4% year to date as of the close of trading on Friday.
You can view the full
or get investment ideas from our