Q4 Earnings Preview for Northern Trust (NTRS)

in EARNINGS/INVESTING IDEAS by

Northern Trust Corporation (NASDAQGS:NTRS) is scheduled to report Q4 earnings results on January 23, 2019, at 9:00 a.m. (CT). You can find the conference call details here.

The company is expected to report earnings of $1.74/share on revenue of $1.548 billion before markets open for trading. The consensus earnings per share (EPS) of $1.74/share is based on a poll of 13 analysts and represents a growth of 4.7% over the same quarter last year when the company reported earnings of $1.66/share.

The revenue forecast of $1.548 billion based on a poll of 10 analysts implies a year-over-year (YoY) growth of 2.1%. Last year the company reported $1.517 billion in revenue for the quarter.

Expected to report EPS growth of $0.08/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $1,548.00 $1,516.70 2.1%
EPS $1.74 $1.66 4.7%

Having been in business for over a hundred years, Northern Trust has a long-standing reputation for conservative capital allocation. The reputation helps the company attract ultra-high net worth private banking clients. Strong equity markets and management’s initiatives to reduce expenses have driven recent improvements in profitability as depicted below:


NYSE:APH Fundamentals Chart

Source: Finbox

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter.

What are your expectations from Northern Trust for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $1.63 $1.69 3.6% Beat
Q2, 2019 $1.68 $1.75 4.2% Beat
Q1, 2019 $1.47 $1.53 3.9% Beat
Q4, 2018 $1.64 $1.66 1.3% Beat
Q3, 2018 $1.61 $1.59 -1.5% Missed
Q2, 2018 $1.64 $1.71 4.5% Beat
Q1, 2018 $1.43 $1.60 11.9% Beat
Q4, 2017 $1.30 $1.40 7.4% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report.

After the last earnings report for the period ending September 30, 2019, the stock price reacted by increasing by 2.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-10-23 $97.51 $100.35 2.9% Increase
2019-07-24 $95.01 $99.03 4.2% Increase
2019-04-23 $91.87 $97.73 6.4% Increase
2019-01-23 $90.53 $89.37 -1.3% Decline

Fundamentals And Technical Analysis

Northern Trust is currently trading at $109.38/share, up 1.3% for the day. The company is trading at approximately 99.0% of its 52-week high of $110.48/share. The company’s stock price is up 9.0% since the last earnings report and up 0.6% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 59.51 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

NASDAQGS:NTRS Stock Price Chart Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 15.1x and a forward P/E multiple of 16.0x. Northern Trust’s current share price also implies a price-to-book (P/B) multiple of 2.3x. The following table summarizes some other key fundamental ratios:

Data as of January 20, 2020
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date September 30, 2019
Stock Price (Current) $109.38
P/E Ratio 15.1x
P/E Ratio (Fwd) 16.0x
PEG Ratio 6.0
Total Debt to Capital (%) 36.1%
Levered Free Cash Flow $1.306 billion
Market Capitalization $23.176 billion

Source: Finbox

Company Profile: Northern Trust Corporation

Northern Trust Corporation is a large-cap stock with a market capitalization of $23.176 billion. The company operates in the Financial sector and the Capital Markets industry.

Northern Trust Corporation, a financial holding company, provides wealth management, asset servicing, asset management, and banking solutions for corporations, institutions, families, and individuals worldwide. It operates in two segments, Corporate & Institutional Services (C&IS) and Wealth Management.

The C&IS segment offers asset servicing and related services, including custody, fund administration, investment operations outsourcing, investment management, investment risk, and analytical services, employee benefits services, securities lending, foreign exchange, treasury management, brokerage services, transition management services, banking, and cash management services. This segment serves corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds, and other institutional investors.

The Wealth Management segment offers trust, investment management, custody, and philanthropic; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services; and private and business banking services. This segment serves high-net-worth individuals and families, business owners, executives, professionals, retirees, and established privately-held businesses.

The company also provides asset management services, such as active and passive equity; active and passive fixed income; cash management; alternative asset classes comprising private equity and hedge funds of funds; and multi-manager advisory services and products through separately managed accounts, bank common and collective funds, registered investment companies, exchange-traded funds, non-U.S. collective investment funds, and unregistered private investment funds.  In addition, it offers overlay and other risk management services.

The company was founded in 1889 and is headquartered in Chicago, Illinois.

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