State Street (STT) AI Stock Analysis

• Market Cap: $22.00B
• Dividend Yield: 3.8%
• Average Volume (3M): 2.23M
• Price to Earnings (P/E): 9.3
• Beta (1Y): 0.99
• Revenue Growth: 20.53%
• EPS Growth: 49.80%
• Country: US
• Employees: 52,626
• Sector: Financial
• Sector Strength: 81
• Industry: Asset Management
• EPS (TTM): 8.23
• Shares Outstanding: 288,469,100
• 10 Day Avg. Volume: 1,950,783
• 30 Day Avg. Volume: 2,226,779
• PEG Ratio: 0.19
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.02
• Price to Cash Flow (P/CF): -0.90
• P/FCF Ratio: 0.40
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $106.43
• Price Target Upside: 39.49% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 16

State Street's overall score reflects strong earnings growth and strategic initiatives leading to positive revenue trends. However, challenges in profitability metrics and cash flow generation weigh on the financial performance. The technical indicators suggest caution due to bearish trends, while the valuation remains attractive. Recent corporate events and earnings call provide a positive outlook for future growth.

Positive Factors

Acquisition

STT has entered into an agreement to acquire Mizuho's global custody and related businesses outside of Japan, supporting the overseas investments of Mizuho’s Japanese clients.

Financial Performance

STT announced a significant win with an APAC asset owner, contributing to $154M in annual servicing fee wins.

Valuation

Valuation also screens very attractively – after updating the model, STT was the most heavily discounted bank on 2026 P/E, indicating potential for future stock price appreciation.

Negative Factors

Buyback Expectations

T1 leverage ratio below target range could weigh on consensus buyback expectations.

Leadership Change

The CFO, Eric Aboaf, will be transitioning out of the role in February 2025, and no successor has been named yet.

NII Outlook

Stock underperformed S&P500 -4% despite modest beat, as management NII outlook of roughly flat underwhelmed.

State Street Business Overview & Revenue Model

Company Description

State Street Corporation, through its subsidiaries, provides a range of financial products and services to institutional investors worldwide. The company offers investment servicing products and services, including custody; product accounting; daily pricing and administration; master trust and master custody; depotbank services; record-keeping; cash management; foreign exchange, brokerage and other trading services; securities finance and enhanced custody products; deposit and short-term investment facilities; loans and lease financing; investment manager and alternative investment manager operations outsourcing; performance, risk, and compliance analytics; and financial data management to support institutional investors. It also engages in the provision of portfolio management and risk analytics, as well as trading and post-trade settlement services with integrated compliance and managed data. In addition, the company offers investment management strategies and products, such as core and enhanced indexing, multi-asset strategies, active quantitative and fundamental active capabilities, and alternative investment strategies. Further, it provides services and solutions, including environmental, social, and governance investing; defined benefit and defined contribution; and global fiduciary solutions, as well as exchange-traded fund under the SPDR ETF brand. The company provides its products and services to mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments, and investment managers. State Street Corporation was founded in 1792 and is headquartered in Boston, Massachusetts.

How the Company Makes Money

State Street makes money primarily through three key revenue streams: investment servicing, investment management, and investment research and trading. The investment servicing segment generates revenue by offering custody, accounting, administration, and securities lending services to institutional investors. This segment is the company's largest revenue contributor. The investment management division, operating under the brand State Street Global Advisors, earns fees by managing assets on behalf of clients, including mutual funds, ETFs, and institutional portfolios. The investment research and trading segment generates income by providing trading, research, and securities lending services. Additionally, State Street's partnerships with other financial institutions and the expansion of its data and analytics offerings contribute to its revenue growth. Factors such as changes in interest rates, market volatility, and regulatory requirements can significantly impact the company's earnings.

State Street Financial Statement Overview

Summary

State Street shows strong revenue growth and a solid gross margin, yet profitability metrics require attention due to recent declines. The balance sheet reflects a leveraged position, and cash flow challenges could impact financial flexibility. Improvements in cash flow generation and profitability margins would enhance the company's financial standing.

Income Statement

State Street has demonstrated solid revenue growth with a 8.83% increase in the most recent year. However, the absence of EBIT and EBITDA margins in the latest year is a concern for profitability analysis. The gross profit margin remains strong at approximately 96.64%, but the net profit margin has declined slightly, indicating potential pressure on net income levels.

Balance Sheet

The company exhibits a relatively high debt-to-equity ratio of 1.31, suggesting a leveraged position. However, the equity ratio of 7.17% shows a reasonable level of equity compared to total assets. Return on Equity (ROE) stands at 10.61%, reflecting moderate profitability relative to shareholders' equity.

Cash Flow

State Street's cash flow presents challenges, with a decrease in free cash flow from the previous year to $622 million. The operating cash flow to net income ratio is low at 0.23, indicating that net income is not fully backed by operating cash flow. However, the free cash flow to net income ratio is better at 0.23, showing some alignment between cash generation and profitability.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
13.00B	11.95B	12.15B	12.03B	11.70B
	Gross Profit
12.56B	11.52B	11.75B	11.58B	11.21B
	EBIT
-13.05B	2.74B	4.76B	3.17B	2.90B
	EBITDA
0.00	3.38B	4.41B	4.28B	3.99B
	Net Income Common Stockholders
2.69B	1.94B	2.77B	2.69B	2.42B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
62.04B	48.57B	101.60B	183.39B	179.47B
	Total Assets
353.24B	297.26B	301.45B	314.62B	314.71B
	Total Debt
33.11B	21.50B	17.09B	13.60B	17.79B
	Net Debt
29.97B	-70.27B	-88.47B	-96.39B	-102.64B
	Total Liabilities
327.91B	273.46B	276.26B	287.26B	288.51B
	Stockholders Equity
25.33B	23.80B	25.19B	27.36B	26.20B
Cash Flow		Free Cash Flow
622.00M	-126.00M	11.22B	-7.52B	2.97B
	Operating Cash Flow
622.00M	690.00M	11.95B	-6.71B	3.53B
	Investing Cash Flow
-1.32B	12.74B	6.82B	-2.17B	-65.53B
	Financing Cash Flow
696.00M	-13.35B	-18.43B	9.05B	62.17B

State Street Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 76.30
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STT, the sentiment is Negative. The current price of 76.3 is below the 20-day moving average (MA) of 87.04, below the 50-day MA of 92.90, and below the 200-day MA of 88.50, indicating a bearish trend. The MACD of -1.15 indicates Negative momentum. The RSI at 42.56 is Neutral, neither overbought nor oversold. The STOCH value of 22.04 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STT.

State Street Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BK	80 Outperform	$52.63B	12.65	11.02%	2.50%	17.56%	46.36%
BLK	76 Outperform	$127.71B	19.58	14.67%	2.49%	12.15%	15.17%
SCHW	72 Outperform	$128.76B	23.12	13.30%	1.48%	1.87%	17.63%
TROW	70 Outperform	$18.36B	9.02	20.60%	6.04%	9.80%	17.87%
NTRS	68 Neutral	$16.77B	8.80	16.32%	3.49%	29.42%	92.95%
STT	66 Neutral	$22.00B	9.28	10.93%	3.80%	20.53%	49.80%
Sector *	63 Neutral	$12.88B	9.21	9.18%	4.78%	16.30%	-8.66%

State Street Corporate Events

State Street Highlights Growth at RBC Conference

On March 5, 2025, State Street’s executives participated in the RBC Global Financial Institutions Conference, highlighting their strategic growth initiatives and financial performance. The company reported significant revenue and asset growth from 2022 to 2024, driven by a focus on high-growth areas such as ETFs, non-U.S. markets, and wealth distribution channels. This strategic focus has resulted in higher revenues, asset under management growth, and pre-tax margin expansion, positioning State Street for continued growth.

State Street to Redeem $500M Senior Notes Early

On February 26, 2025, State Street Corporation announced its plan to redeem its $500 million 2.901% Fixed-to-Floating Rate Senior Notes due 2026 on March 30, 2025. The redemption will be at the principal amount plus accrued interest, with payment scheduled for the next business day. This move indicates State Street’s strategic financial management, utilizing cash on hand to fund the redemption, which may impact its liquidity and financial positioning.

State Street Announces Leadership Changes and Strong Q4 Results

In a recent announcement, State Street Corporation detailed changes in its executive leadership and financial performance for 2024. Eric Aboaf, the Vice Chairman and CFO, will step down in February 2025, with Mark R. Keating appointed as interim CFO. The company reported strong financial results for the fourth quarter of 2024, with a 12% increase in total revenue and a 13% rise in fee revenue year-over-year, driven by strategic initiatives in Investment Services and Global Advisors. This performance indicates robust business momentum and positions the company well for sustainable growth in 2025.