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Why Is Northern Trust Corporation (NTRS) Up 2.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Northern Trust Corporation (NTRS - Free Report) . Shares have added about 2.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Northern Trust Corporation due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Northern Trust's Q4 Earnings Miss on Higher Expenses
Northern Trust delivered fourth-quarter 2020 adjusted earnings per share of $1.49, missing the Zacks Consensus Estimate of $1.52, on lower revenues. Also, the reported figure declined 12.4% year over year.
Results were negatively impacted by lower net interest income, partly offset by a rise in fee income. In addition, decline in net interest margin was a negative. Moreover, escalating operating expenses was a major drag. However, rise in assets under custody and assets under management were driving factors. Moreover, credit provision was a tailwind.
Including certain one-time items, net income came in at $240.9 million or $1.12 per share, compared with the $371.1 million or $1.70 per share reported in the prior-year quarter.
For full-year 2020, net income was $1.2 billion or $5.46 per share compared with the prior year’s $1.5 billion or $6.63 per share. The Zacks Consensus Estimate was pinned at $5.83.
Revenues Down, Costs Flare Up
Total revenues of $1.53 billion were down 2% year on year. The revenue figure, however, beat the Zacks Consensus Estimate of $1.5 billion.
For full-year 2020, revenues on a fully taxable equivalent basis, came in at $6.1 billion, flat year over year. The figure is also in line with the Zacks Consensus Estimate.
On a fully-taxable equivalent basis, net interest income of $345.1 million in the fourth quarter declined 20%, year on year, mainly on lower net interest margin, negated by rise in average earning assets to some extent.
Net interest margin (NIM) came in at 1.05%, shrinking 54 basis points from the prior-year quarter. This decline chiefly reflects the impact of lower interest rates and a balance-sheet mix shift.
Consolidated Trust, Investment and Other Servicing Fees summed $1.03 billion, up 3% year on year.
Non-interest income climbed 5% from the year-ago quarter to $1.19 billion. Rise in trust, investment and other servicing fees, foreign-exchange trading income, treasury management fees, along with other operating income and higher security commissions and trading income, led to this upsurge.
Non-interest expenses flared up 7% year over year to $1.15 billion during the October-December period. This upswing mainly resulted from an elevation in compensation, employee benefits, equipment and software, outside service and occupancy expenses. These were partly muted by lower other expenses.
Assets Under Management and Custody
As of Dec 31, 2020, Northern Trust’s total assets under custody climbed 22% year over year to $11.3 trillion, while total assets under management increased 14% to $1.41 trillion.
Credit Quality: A Concern
Credit metrics deteriorated during the December-end quarter. Total allowance for credit losses came in at $259.9 million, significantly up 109% year over year. Net charge-offs were $5.5 million compared with the $2.3 million reported in the year-ago quarter.
Credit provision was $2.5 million in the fourth quarter compared with the $1 million reported in the prior-year quarter. Further, non-accrual assets surged 52.5% year over year to $132.4 million as of Dec 31, 2020.
Strong Capital Position
Under the Advanced Approach, as of Dec 31, 2020, Tier 1 capital ratio, total capital ratio and Tier 1 leverage ratio came in at 14.5%, 15.9% and 7.6%, compared with the 15%, 16.8% and 8.7%, respectively, witnessed in the prior-year quarter. All ratios exceeded the regulatory requirements.
Return on average common equity was 8.8% compared with the year-earlier quarter’s 14.8%. Return on average assets was 0.67% compared with the 1.25% witnessed in the year-ago quarter.
During 2020, Northern Trust repurchased 3.28 million shares for $299.8 million at an average price of $91.49 per share. This includes shares related to share-based compensation.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Northern Trust Corporation has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Northern Trust Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Northern Trust Corporation (NTRS) Up 2.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Northern Trust Corporation (NTRS - Free Report) . Shares have added about 2.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Northern Trust Corporation due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Northern Trust's Q4 Earnings Miss on Higher Expenses
Northern Trust delivered fourth-quarter 2020 adjusted earnings per share of $1.49, missing the Zacks Consensus Estimate of $1.52, on lower revenues. Also, the reported figure declined 12.4% year over year.
Results were negatively impacted by lower net interest income, partly offset by a rise in fee income. In addition, decline in net interest margin was a negative. Moreover, escalating operating expenses was a major drag. However, rise in assets under custody and assets under management were driving factors. Moreover, credit provision was a tailwind.
Including certain one-time items, net income came in at $240.9 million or $1.12 per share, compared with the $371.1 million or $1.70 per share reported in the prior-year quarter.
For full-year 2020, net income was $1.2 billion or $5.46 per share compared with the prior year’s $1.5 billion or $6.63 per share. The Zacks Consensus Estimate was pinned at $5.83.
Revenues Down, Costs Flare Up
Total revenues of $1.53 billion were down 2% year on year. The revenue figure, however, beat the Zacks Consensus Estimate of $1.5 billion.
For full-year 2020, revenues on a fully taxable equivalent basis, came in at $6.1 billion, flat year over year. The figure is also in line with the Zacks Consensus Estimate.
On a fully-taxable equivalent basis, net interest income of $345.1 million in the fourth quarter declined 20%, year on year, mainly on lower net interest margin, negated by rise in average earning assets to some extent.
Net interest margin (NIM) came in at 1.05%, shrinking 54 basis points from the prior-year quarter. This decline chiefly reflects the impact of lower interest rates and a balance-sheet mix shift.
Consolidated Trust, Investment and Other Servicing Fees summed $1.03 billion, up 3% year on year.
Non-interest income climbed 5% from the year-ago quarter to $1.19 billion. Rise in trust, investment and other servicing fees, foreign-exchange trading income, treasury management fees, along with other operating income and higher security commissions and trading income, led to this upsurge.
Non-interest expenses flared up 7% year over year to $1.15 billion during the October-December period. This upswing mainly resulted from an elevation in compensation, employee benefits, equipment and software, outside service and occupancy expenses. These were partly muted by lower other expenses.
Assets Under Management and Custody
As of Dec 31, 2020, Northern Trust’s total assets under custody climbed 22% year over year to $11.3 trillion, while total assets under management increased 14% to $1.41 trillion.
Credit Quality: A Concern
Credit metrics deteriorated during the December-end quarter. Total allowance for credit losses came in at $259.9 million, significantly up 109% year over year. Net charge-offs were $5.5 million compared with the $2.3 million reported in the year-ago quarter.
Credit provision was $2.5 million in the fourth quarter compared with the $1 million reported in the prior-year quarter. Further, non-accrual assets surged 52.5% year over year to $132.4 million as of Dec 31, 2020.
Strong Capital Position
Under the Advanced Approach, as of Dec 31, 2020, Tier 1 capital ratio, total capital ratio and Tier 1 leverage ratio came in at 14.5%, 15.9% and 7.6%, compared with the 15%, 16.8% and 8.7%, respectively, witnessed in the prior-year quarter. All ratios exceeded the regulatory requirements.
Return on average common equity was 8.8% compared with the year-earlier quarter’s 14.8%. Return on average assets was 0.67% compared with the 1.25% witnessed in the year-ago quarter.
During 2020, Northern Trust repurchased 3.28 million shares for $299.8 million at an average price of $91.49 per share. This includes shares related to share-based compensation.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Northern Trust Corporation has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Northern Trust Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.