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Why This is the Best Time to Buy State Street (STT) Stock
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State Street Corporation (STT - Free Report) is well poised for future growth, given its global network, wide range of innovative products and services, and sturdy capital position. Also, easing margin pressure is expected to aid top-line improvement.
The company’s Zacks Consensus Estimate for the current-year earnings has moved 3.6% upward over the past 60 days, reflecting analysts’ optimism about its earnings growth potential. Thus, the stock currently carries a Zacks Rank #2 (Buy).
State Street’s share price has increased 23.2% so far this year, outperforming the 6.3% rally for the industry it belongs to. Given the positive estimate revisions and a solid Zacks Rank, the stock should gain further.
Looking at the fundamentals, State Street’s revenues have increased at a CAGR of 1.5% over the past five years (2012–2016), primarily driven by higher management fees and securities finance income. Moreover, revenues are expected to continue rising, given the company’s continued investment in new products and the acquisition of GE Asset Management.
Also, with the economic recovery and the gradual change in rate environment, pressure on State Street’s net interest margin (NIM) seems to be easing. Given the optimistic view on future rate hikes, the company’s margin is expected to improve further, thereby supporting top-line growth.
Further, given a stable capital position and impressive earnings strength, the company is expected to continue enhancing shareholder value through efficient capital deployment activities.
However, continuously rising expenses remains a major concern for the company. Expenses have increased at a five-year (2012–2016) CAGR of 4.1%, primarily due to a rise in compensation, and acquisition and restructuring costs. Elevated expenses are likely to curb bottom-line growth in the quarters ahead.
A few other top-ranked stocks from the finance space are mentioned below.
The Toronto-Dominion Bank (TD - Free Report) has witnessed an upward earnings estimate revision of 13.2% for the current fiscal year over the past 60 days. Its share price has increased 25.3% in the past year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
M&T Bank Corporation (MTB - Free Report) witnessed a marginal upward earnings estimate revision for the current year over the past 60 days. Its share price has increased 32% in a year’s time. It carries a Zacks Rank #2.
The PNC Financial Services Group, Inc. (PNC - Free Report) also carries a Zacks Rank #2. Its Zacks Consensus Estimate for the current year has been revised marginally upward in the last 60 days. Its shares have gained 44.7% in the past 12 months.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Why This is the Best Time to Buy State Street (STT) Stock
State Street Corporation (STT - Free Report) is well poised for future growth, given its global network, wide range of innovative products and services, and sturdy capital position. Also, easing margin pressure is expected to aid top-line improvement.
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The company’s Zacks Consensus Estimate for the current-year earnings has moved 3.6% upward over the past 60 days, reflecting analysts’ optimism about its earnings growth potential. Thus, the stock currently carries a Zacks Rank #2 (Buy).
State Street’s share price has increased 23.2% so far this year, outperforming the 6.3% rally for the industry it belongs to. Given the positive estimate revisions and a solid Zacks Rank, the stock should gain further.
Looking at the fundamentals, State Street’s revenues have increased at a CAGR of 1.5% over the past five years (2012–2016), primarily driven by higher management fees and securities finance income. Moreover, revenues are expected to continue rising, given the company’s continued investment in new products and the acquisition of GE Asset Management.
Also, with the economic recovery and the gradual change in rate environment, pressure on State Street’s net interest margin (NIM) seems to be easing. Given the optimistic view on future rate hikes, the company’s margin is expected to improve further, thereby supporting top-line growth.
Further, given a stable capital position and impressive earnings strength, the company is expected to continue enhancing shareholder value through efficient capital deployment activities.
However, continuously rising expenses remains a major concern for the company. Expenses have increased at a five-year (2012–2016) CAGR of 4.1%, primarily due to a rise in compensation, and acquisition and restructuring costs. Elevated expenses are likely to curb bottom-line growth in the quarters ahead.
A few other top-ranked stocks from the finance space are mentioned below.
The Toronto-Dominion Bank (TD - Free Report) has witnessed an upward earnings estimate revision of 13.2% for the current fiscal year over the past 60 days. Its share price has increased 25.3% in the past year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
M&T Bank Corporation (MTB - Free Report) witnessed a marginal upward earnings estimate revision for the current year over the past 60 days. Its share price has increased 32% in a year’s time. It carries a Zacks Rank #2.
The PNC Financial Services Group, Inc. (PNC - Free Report) also carries a Zacks Rank #2. Its Zacks Consensus Estimate for the current year has been revised marginally upward in the last 60 days. Its shares have gained 44.7% in the past 12 months.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>