We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Higher Costs Hurt State Street (STT) Profits: Time to Sell?
Read MoreHide Full Article
State Street Corporation’s (STT - Free Report) bottom-line growth is likely to be hurt to some extent because of continuously increasing operating expenses. Moreover, the company has been witnessing downward estimate revisions off late, indicating that analysts are not very optimistic about its earnings growth potential.
The company’s Zacks Consensus Estimate for current-year earnings has been revised 3.1% downward over the past 60 days. Thus, the stock currently has a Zacks Rank #4 (Sell).
In fact, its price performance does not seem impressive either. Its shares have lost 26.2% so far this year compared with 7.8% decline of the industry it belongs to.
Looking at the fundamentals, State Street’s operating expenses witnessed a five-year (2013-2017) CAGR of 3.6% mainly due to higher compensation and employee benefit costs as well as acquisition and restructuring costs. Despite taking cost-saving initiatives through State Street Beacon, the company’s overall expenses are likely to remain elevated in the near term, thereby, hurting profits.
Moreover, because of lower volatility in foreign exchange, the company’s trading services revenues decreased at a three-year (2015-2017) CAGR of 3.3%. While the trend reversed in the first nine months of 2018, uncertainty about the performance of the capital markets makes us apprehensive about the sustainability of the same.
Nevertheless, the company's new business wins, rising interest rates and strategic acquisitions are likely to continue supporting its profitability in the quarters ahead.
Over the past 60 days, Citigroup has witnessed an upward earnings estimate revision of 1.5% for the current year. Its shares have gained 10.9% in the past two years.
JPMorgan’s earnings estimates for 2018 have been revised 1.4% upward over the past 60 days. Shares of the company have gained 36.5% in the past two years.
U.S. Bancorp’s share price has increased nearly 8.8% in the past two years. For 2018, its earnings estimates have been marginally revised upward over the past 60 days.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Higher Costs Hurt State Street (STT) Profits: Time to Sell?
State Street Corporation’s (STT - Free Report) bottom-line growth is likely to be hurt to some extent because of continuously increasing operating expenses. Moreover, the company has been witnessing downward estimate revisions off late, indicating that analysts are not very optimistic about its earnings growth potential.
The company’s Zacks Consensus Estimate for current-year earnings has been revised 3.1% downward over the past 60 days. Thus, the stock currently has a Zacks Rank #4 (Sell).
In fact, its price performance does not seem impressive either. Its shares have lost 26.2% so far this year compared with 7.8% decline of the industry it belongs to.
Looking at the fundamentals, State Street’s operating expenses witnessed a five-year (2013-2017) CAGR of 3.6% mainly due to higher compensation and employee benefit costs as well as acquisition and restructuring costs. Despite taking cost-saving initiatives through State Street Beacon, the company’s overall expenses are likely to remain elevated in the near term, thereby, hurting profits.
Moreover, because of lower volatility in foreign exchange, the company’s trading services revenues decreased at a three-year (2015-2017) CAGR of 3.3%. While the trend reversed in the first nine months of 2018, uncertainty about the performance of the capital markets makes us apprehensive about the sustainability of the same.
Nevertheless, the company's new business wins, rising interest rates and strategic acquisitions are likely to continue supporting its profitability in the quarters ahead.
A few better-ranked stocks from the same space are Citigroup Inc. (C - Free Report) , JPMorgan Chase & Co. (JPM - Free Report) and U.S. Bancorp (USB - Free Report) . Each of these companies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past 60 days, Citigroup has witnessed an upward earnings estimate revision of 1.5% for the current year. Its shares have gained 10.9% in the past two years.
JPMorgan’s earnings estimates for 2018 have been revised 1.4% upward over the past 60 days. Shares of the company have gained 36.5% in the past two years.
U.S. Bancorp’s share price has increased nearly 8.8% in the past two years. For 2018, its earnings estimates have been marginally revised upward over the past 60 days.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>