On Mar 10, 2014, we issued an updated research report on one
of the major regional banks -
Northern Trust Corporation
). Though the company recently reported disappointing
fourth-quarter 2013 results, we remain encouraged owing to its
sound asset quality and strong capital position.
FIFTH THIRD BK (FITB): Free Stock Analysis
JMP GROUP INC (JMP): Free Stock Analysis
NORTHERN TRUST (NTRS): Free Stock Analysis
PNC FINL SVC CP (PNC): Free Stock Analysis
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Due to higher operating expenses, Northern Trust's fourth-quarter
2013 adjusted earnings per share of 75 cents missed the Zacks
Consensus Estimate by a penny. However, the quarter witnessed
top-line growth and improved asset management and servicing fees.
Northern Trust's consistent efforts toward successfully executing
its organic growth strategy are commendable. Revenues grew at a
CAGR of 2.9% over the last four years (2010-2013).
Further, the company's focus on new business looks promising.
Northern Trust undertook several measures that led to about $270
million in pre-tax profit improvements in 2013, surpassing the
target of $250 million. The company is continuing these measures
in 2014, which are expected to prove more accretive to the
company's earnings in the near term.
However, we remain cautious owing to mounting non-interest
expenses, declining net interest margin due to the low interest
rate environment, volatile market conditions and the stringent
regulatory landscape that may pose threats to the company's
financials in the near term.
Over the past 60 days, the Zacks Consensus Estimate advanced 0.3%
for 2014 and 2015 to $3.44 per share and $3.86 per share,
Northern Trust currently carries a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Stocks in the finance sector worth considering include
The PNC Financial Services Group, Inc.
Fifth Third Bancorp
JMP Group Inc.
). All of these have a Zacks Rank #2 (Buy).