Northern Trust Corporation
) have recorded a year-to-date return of 13.3%. Impressive
organic growth, strong capital deployment activities and
continuous improvement in credit quality were the driving force
behind this growth story. Hence, keeping its shares in your
portfolio will not be a bad idea.
However, we are not so confident that these positive factors will
translate in to further price appreciation going forward due to
considerable pressure on its bottom line owing to the sluggish
economic recovery and stringent regulatory requirements.
Consequently, adding more shares of Northern Trust to your
portfolio may not be a good idea.
Why This Stance?
Northern Trust's third-quarter 2013 earnings per share outpaced
the Zacks Consensus Estimate. Results reflected top-line growth,
lower provision for credit losses and a strong capital position.
However, rise in operating expenses and a decline in net interest
income were matters of concern.
Northern Trust's capital deployment activities reflect its
efforts towards enhancing shareholders' value. Apart from the
regular payment of a quarterly cash dividend, the company has an
effective share repurchase program in place.
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. Moreover, a substantial exposure in global market,
poses a risk to the company's earnings amid the changing scenario
in financial markets.
The company has seen a mixed track record when it comes to
estimate revisions and the Zacks Consensus Estimate has not been
in trend either. As a result, the company currently carries a
Zacks Rank #3 (Hold). Over the last 30 days, the Zacks Consensus
Estimate for 2013 declined 0.3% to $3.01 per share, while for
2014 it remained stable at $3.43 per share.
Other Stocks to Consider
If you are interested in the banking sector, you may consider a
few better-ranked stocks like
Fifth Third Bancorp
Huntington Bancshares Incorporated
). All these stocks carry a Zacks Rank #2 (Buy).
FIFTH THIRD BK (FITB): Free Stock Analysis
HUNTINGTON BANC (HBAN): Free Stock Analysis
KEYCORP NEW (KEY): Free Stock Analysis Report
NORTHERN TRUST (NTRS): Free Stock Analysis
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