On Mar 11, 2013, we reiterated our long-term recommendation on
Northern Trust Corporation
) at Neutral based on its well-managed global franchise, strong
capital base and expense reduction initiatives. However,
regulatory issues coupled with fundamental pressures on the
banking sector might act as deterrents to the company's
BANKUNITED INC (BKU): Free Stock Analysis
FIFTH THIRD BK (FITB): Free Stock Analysis
NORTHERN TRUST (NTRS): Free Stock Analysis
STATE ST CORP (STT): Free Stock Analysis
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Northern Trust reported its fourth-quarter 2012 earnings of 71
cents per share, lagging the Zacks Consensus Estimate by 4 cents.
However, this was favorable compared with the prior-year quarter
earnings of 67 cents per share.
Quarterly results on a year-over-year basis benefited from
top-line growth and decline in operating expenses. Further,
improving credit quality and strong capital ratios were the
tailwinds for Northern Trust.
Northern Trust successfully executed the Driving Performance
initiatives announced at the beginning of 2012, which contributed
about $160 million in pre-tax profit improvements in 2012, split
approximately 40-60 between revenue and expense items and boosted
pre-tax margin by about 375 basis points. Moreover, the company
remains on track to deliver $250 million of pre-tax benefits by
the end of 2013.
However, low short-term interest rates along with persistent
narrow spreads at the short end of the yield curve continue to
negatively impact net interest income and money market mutual
fund fees. Though the U.S. economy posted stable to improving
economic data during 2012, including favorable developments in
unemployment and housing, concerns about the outlook for the
global economy and continued political uncertainty persist.
For Northern Trust, the Zacks Consensus Estimate for 2013
increased 0.3% to $3.21 per share as 3 out of 16 estimates were
revised higher over the last 30 days. For 2014, 4 of the 13
estimates moved north over the same time frame, lifting the Zacks
Consensus Estimate by 0.3% to $3.59 per share. With the upswing
in the Zacks Consensus Estimates, Northern Trust retains a Zacks
Rank #3 (Hold).
Other Major Banks to Consider
Besides Northern Trust, other banks that are worth considering
Fifth Third Bancorp
State Street Corporation
). All the 3 banks retain a Zacks Rank #2 (Buy).