On Mar 28, 2013, we reiterated our long-term recommendation on
State Street Corporation
) at Neutral. Our decision rests on augmented top line and solid
capital position. However, we remain concerned about its mounting
State Street's fourth-quarter 2012 earnings came in at $1.11 per
share, substantially beating the Zacks Consensus Estimate of
$1.00. Earnings were primarily driven by an improved top line and
a robust capital position.
Following its fourth-quarter results, the Zacks Consensus
Estimate for 2013 went up by 1.38% to $4.29 per share over the
last 60 days. The Zacks Consensus Estimate for 2014 also inched
up 1.83% to $5.00 per share over the same time frame. Hence,
State Street currently holds a Zacks Rank #2 (Buy).
With the approval of State Street's Capital Plan by the Federal
Reserve, the company authorized a new share repurchase program,
under which it plans to buy back shares worth up to $2.1 billion
through Mar 13, 2014. Further, it received approval from the Fed
to hike its quarterly dividend by 8.3% to 26 cents per share.
State Street's restructuring initiatives are expected to improve
efficiency and boost its bottom line. Further, a solid capital
position and inorganic growth initiatives along with significant
international exposure are expected to enhance its revenue
However, State Street's escalating operating expenses and
deteriorating net interest margin (NIM) are expected to hamper
its bottom-line growth in the near future. Further, sluggish
economic recovery and low-interest rate environment can act as
dampeners going forward.
Other Major Banks to Consider
Though we prefer State Street, other major banks that are
performing well includes
JPMorgan Chase & Co
Northern Trust Corporation
). All these also carry a Zacks Rank #2 (Buy).
CITIGROUP INC (C): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis
NORTHERN TRUST (NTRS): Free Stock Analysis
STATE ST CORP (STT): Free Stock Analysis
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