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Northern (NTRS)
NASDAQ:NTRS
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Northern
(NASDAQ:NTRS)71Outperform
Positive Factors
Earnings
The stock experienced a 2% increase after consecutive quarters of exceeding expectations in net interest income, fees, and expenses.
Strategic Initiatives
Management provided a comprehensive list of strategic priorities for 2025 while maintaining medium-term profitability targets.
Negative Factors
Growth Challenges
Organic growth remains a challenge, with the company not achieving desired growth levels in the past couple of years.
Northern (NTRS) vs. S&P 500 (SPY)
Market Cap
$20.62B
Dividend Yield2.85%
Average Volume (3M)1.26M
Price to Earnings (P/E)10.8
Beta (1Y)1.22
Revenue Growth29.42%
EPS Growth92.95%
CountryUS
Employees23,100
SectorFinancial
Sector Strength93
IndustryAsset Management Services
Share Statistics
EPS (TTM)9.77
Shares Outstanding195,697,740
10 Day Avg. Volume1,379,101
30 Day Avg. Volume1,256,167
Financial Highlights & Ratios
PEG Ratio0.12
Price to Book (P/B)N/A
Price to Sales (P/S)2.45
Price to Cash Flow (P/CF)-1.90
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$118.00Price Target Upside13.11% Upside
Rating ConsensusHold
Number of Analyst Covering15
Northern Business Overview & Revenue Model
Company DescriptionNorthern Trust Corporation (NTRS) is a leading financial services company headquartered in Chicago, Illinois. Established in 1889, the company operates globally, focusing on providing asset servicing, asset management, and wealth management services to corporations, institutions, affluent families, and individuals. Northern Trust is renowned for its client-centric approach, leveraging cutting-edge technology and expert insights to deliver tailored solutions across various sectors, including financial services, healthcare, and real estate.
How the Company Makes MoneyNorthern Trust Corporation generates revenue primarily through three key business segments: Corporate & Institutional Services (C&IS), Wealth Management, and Asset Management. The C&IS segment provides comprehensive asset servicing solutions, including custody, fund administration, and investment operations outsourcing, primarily to institutional clients such as pension funds and public entities. The Wealth Management segment caters to high-net-worth individuals and families, offering personalized financial planning, trust, and investment management services. Meanwhile, the Asset Management segment generates revenue by managing investment products and solutions, including mutual funds and alternative investments, for institutional and individual investors. Additionally, Northern Trust's earnings are bolstered by strategic partnerships and collaborations with technology firms and financial institutions, enhancing their service offerings and operational efficiency.
Northern Financial Statement Overview
Summary
Northern Trust shows strong revenue growth and improved net profitability. However, concerns arise from unavailable EBIT and EBITDA margins and cash flow challenges, particularly in free cash flow.Income Statement
Northern has demonstrated a strong revenue growth trend, with a notable increase from $6.77 billion in 2023 to $8.29 billion in 2024, marking a 22.6% growth rate. The gross profit margin remained stable at 100% as revenue equals gross profit. However, the EBIT and EBITDA margins are currently unavailable for 2024, indicating potential operational challenges. Net profit margin improved significantly to 24.5% from 16.3% in 2023, highlighting enhanced profitability.75
Positive
Balance Sheet
Northern exhibits a moderate balance sheet with a debt-to-equity ratio of 0.32 in 2024, suggesting manageable leverage. The return on equity (ROE) is robust at 15.9%, reflecting efficient use of equity to generate profits. However, the equity ratio is relatively low at 8.2%, indicating a high proportion of total liabilities compared to assets, which may pose potential risks under fluctuating market conditions.65
Positive
Cash Flow
The cash flow analysis reveals a challenging scenario with a decline in free cash flow from $1.95 billion in 2023 to -$486 million in 2024. Despite a negative operating cash flow to net income ratio, free cash flow to net income deteriorated significantly, highlighting liquidity constraints. These issues may impact future capital expenditure and operational flexibility.50
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 8.29B | 6.77B | 6.75B | 6.55B | 5.98B | Gross Profit |
| 8.29B | 6.77B | 6.75B | 6.55B | 5.98B | EBIT |
| -10.96B | 1.46B | 2.26B | 2.01B | 1.63B | EBITDA |
| 0.00 | 2.10B | 2.32B | 2.53B | 2.13B | Net Income Common Stockholders |
| 2.03B | 1.11B | 1.34B | 1.55B | 1.21B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 4.68B | 14.89B | 4.69B | 3.06B | 4.39B | Total Assets |
| 155.51B | 150.78B | 155.04B | 183.89B | 170.00B | Total Debt |
| 4.08B | 13.41B | 12.38B | 7.24B | 8.60B | Net Debt |
| -595.90M | -23.82B | 7.70B | 4.18B | 4.21B | Total Liabilities |
| 142.72B | 138.89B | 143.78B | 7.24B | 8.60B | Stockholders Equity |
| 12.79B | 11.90B | 11.26B | 12.02B | 11.69B |
| Cash Flow | Free Cash Flow | |||
| -486.00M | 1.95B | 2.26B | 1.26B | 1.76B | Operating Cash Flow |
| -486.00M | 2.63B | 2.39B | 1.36B | 1.90B | Investing Cash Flow |
| -2.56B | 4.78B | 25.93B | -18.60B | -29.92B | Financing Cash Flow |
| 3.44B | -7.18B | -26.44B | 16.07B | 27.87B |
Northern Technical Analysis
Negative
104.32
Price Trends
108.05
Negative
105.78
Negative
95.46
Positive
Market Momentum
-1.17
Positive
35.25
Neutral
18.64
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NTRS, the sentiment is Negative. The current price of 104.32 is below the 20-day moving average (MA) of 110.05, below the 50-day MA of 108.05, and above the 200-day MA of 95.46, indicating a neutral trend. The MACD of -1.17 indicates Positive momentum. The RSI at 35.25 is Neutral, neither overbought nor oversold. The STOCH value of 18.64 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NTRS.
Northern Risk Analysis
Northern disclosed 45 risk factors in its most recent earnings report. Northern reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Northern Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $689.35B | 12.48 | 17.28% | 1.95% | 17.07% | 21.78% | |
79 Outperform | $62.00B | 14.93 | 11.02% | 2.16% | 17.56% | 46.36% | |
77 Outperform | $192.53B | 15.02 | 13.16% | 3.04% | 9.17% | 53.77% | |
74 Outperform | $177.14B | 14.00 | 11.95% | 2.07% | 14.80% | 77.97% | |
71 Outperform | $20.62B | 10.78 | 16.32% | 2.85% | 29.42% | 92.95% | |
64 Neutral | $14.34B | 10.61 | 9.28% | 4.07% | 18.04% | -9.54% | |
64 Neutral | $26.69B | 11.26 | 10.93% | 3.23% | 20.53% | 49.80% |
* Financial Sector Average
Performance Comparison
NTRS
Northern
104.32
24.34
30.43%
BK
Bank of New York Mellon Corporation
85.84
31.68
58.49%
JPM
JPMorgan Chase & Co.
242.28
58.20
31.62%
MS
Morgan Stanley
119.29
35.14
41.76%
STT
State Street
89.65
18.72
26.39%
GS
Goldman Sachs Group
559.67
181.85
48.13%
Northern Earnings Call Summary
Earnings Call Date: Jan 23, 2025 | % Change Since: -2.86% | Next Earnings Date: Apr 25, 2025
Earnings Call Sentiment Positive
The earnings call reflected strong financial performance and strategic progress, with significant growth in Trust fees, net interest income, and EPS. The successful implementation of the One Northern Trust strategy and achievements in Wealth Management and Asset Management were notable highlights. However, there were concerns about service quality due to headcount reductions and currency impacts on revenue growth.Highlights
Strong Revenue and EPS Growth
Fourth quarter Trust fees were up 12%, net interest income grew 15%, and earnings per share grew by more than 50%. For the full year, excluding notables, revenue was up 8% with EPS growth of 24%.
Successful One Northern Trust Strategy
The strategy resulted in 140 new business opportunities and nearly $3 billion raised in NTAM history, demonstrating the effectiveness of the One Northern Trust strategy.
Wealth Management Achievements
Increased wealth deposits by 9% and expanded segment pretax margin by nearly 400 basis points. Awarded Best Private Bank in the U.S. for the 13th time in 16 years.
Asset Management Growth
Achieved positive inflows for the year, including 13% growth in liquidity, surpassing $300 billion in AUM and generating positive long-term flows in the second half of the year.
Asset Servicing Growth
Capital markets business grew 17% in 2024, with 50% of this growth from new clients, leading to improved organic growth and profitability.
Lowlights
Headcount Reduction and Automation
Within Asset Servicing, headcount reduced for 7 consecutive quarters, translating to a more than 7% decrease relative to peak staffing levels, raising concerns about service quality.
Currency Impact on Revenue
Currency impacts unfavorably affected fourth quarter revenue growth by approximately 50 basis points in Asset Servicing, Custody, and Fund Administration.
Subdued AUM and AUC Growth
Assets under Custody and Administration were down 4% sequentially, primarily due to currency movements and weaker markets, particularly bonds.
Company Guidance
During Northern Trust Corporation's Fourth Quarter 2024 Earnings Call, the company provided robust guidance for the coming year. Trust fees increased by 12%, net interest income grew by 15%, and earnings per share surged over 50% compared to the prior year. The company generated positive Trust fee and total operating leverage for the second consecutive quarter, demonstrating successful execution of their One Northern Trust strategy. For the full year, revenue rose by 8%, contributing to a 24% increase in EPS. The company returned more than $400 million to shareholders in Q4 and $1.5 billion for the year, marking a five-year high. Looking forward, Northern Trust aims for an expense-to-Trust fee ratio of 105% to 110%, pretax margins above 30%, and ROE in the upper half of the 10% to 15% range, along with double-digit EPS growth and significant capital returns.Northern Corporate Events
Business Operations and StrategyFinancial Disclosures
Northern Trust Reports Strong Q4 2024 Financial Results
Positive
Jan 23, 2025
Northern Trust Corporation reported its financial results for the fourth quarter of 2024, with net income of $455.4 million and earnings per diluted common share of $2.26. The company experienced substantial growth in fee revenue and a return on common equity of 15.3%, reflecting progress in its One Northern Trust strategy. Despite a slight decrease in net income compared to the previous quarter, the results indicate strong organic growth across all business segments and efficient productivity initiatives, positioning the company for future growth.
Executive/Board Changes
Northern Trust Elects New Board Members for 2025
Positive
Jan 22, 2025
Northern Trust Corporation announced the election of Robert Moritz and Richard Petrino to its board of directors, with Petrino’s appointment effective immediately on January 22, 2025, and Moritz’s effective March 1, 2025. Their extensive experience in global financial services is expected to enhance Northern Trust’s strategic direction as it continues to serve its clients as a trusted financial partner.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.