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.
Why Is Northern Trust Corporation (NTRS) Up 2.5% Since Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for Northern Trust Corporation (NTRS - Free Report) . Shares have added about 2.5% 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 Q2 Earnings Top Estimates, NII Dips Y/Y
Northern Trust has reported second-quarter 2021 earnings per share of $1.72, which surpassed the Zacks Consensus Estimate of $1.71 on the release of credit reserves. The bottom line increased from $1.46 year over year.
Results were positively impacted by an increase in trust, investment and other servicing fees. A rise in AUC and AUM were the driving factors. Credit provision was a tailwind. However, lower NII on the contraction of margin was a negative. Escalating operating expenses were major drags.
Net income in the quarter was $368.1 million, up 18% year over year.
Revenues Rise, Costs Shoot up
On a fully-taxable-equivalent basis, total revenues of $1.58 billion were up 5% year over year. The top line beat the Zacks Consensus Estimate by 0.32%.
NII of $344 million in the second quarter declined 9% year over year mainly on lower net interest margin, negated by a rise in average earning assets to some extent.
NIM was 0.97%, shrinking 25 basis points from the prior-year quarter. The decline chiefly reflects the impact of lower interest rates.
Non-interest income improved 10% from the year-ago quarter to $1.24 billion. Trust, investment and other servicing fees summed $1.07 billion, up 12% year over year.
Non-interest expenses jumped 8% year over year to $1.12 billion in the second quarter. The upswing mainly resulted from an elevation in compensation, employee benefits, equipment and software and outside service expenses.
Assets Under Management and Custody Rise
As of Jun 30, 2021, Northern Trust’s total AUC climbed 32% year over year to $12.2 trillion, while total AUM increased 22% to $1.54 trillion.
Credit Quality: A Mixed Bag
Credit metrics in the June-ended quarter showed a mixed trend. The company released credit loss reserves of $27 million in the second quarter against provisions of $66 million reported in the prior-year quarter. Net recoveries were $3.2 million compared with $2.6 million reported in the year-ago quarter.
Total allowance for credit losses was $207 million, down 22% year over year. However, total non-accrual assets rose 7.3% to $106.7 million as of Jun 30, 2021.
Capital Position Strong
Under the Advanced Approach, as of Jun 30, 2021, Common Equity Tier 1 capital ratio, total capital ratio and Tier 1 leverage ratio came in at 13.1%, 15.5% and 7.1% compared with 13.9%, 16.8% and 7.6%, respectively, witnessed in the prior-year quarter. All ratios exceeded regulatory requirements.
Return on average common equity was 13.7% compared with the year-earlier quarter’s 12.2%. Return on average assets was 0.96% compared with 0.91% witnessed in the year-ago quarter.
Capital Deployment Activities
In the quarter, the company returned $178.3 million to shareholders through share repurchases and dividends. The company repurchased $135.6 million of common stock under its share repurchase program.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Northern Trust Corporation has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Northern Trust Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Northern Trust Corporation (NTRS) Up 2.5% 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 2.5% 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 Q2 Earnings Top Estimates, NII Dips Y/Y
Northern Trust has reported second-quarter 2021 earnings per share of $1.72, which surpassed the Zacks Consensus Estimate of $1.71 on the release of credit reserves. The bottom line increased from $1.46 year over year.
Results were positively impacted by an increase in trust, investment and other servicing fees. A rise in AUC and AUM were the driving factors. Credit provision was a tailwind. However, lower NII on the contraction of margin was a negative. Escalating operating expenses were major drags.
Net income in the quarter was $368.1 million, up 18% year over year.
Revenues Rise, Costs Shoot up
On a fully-taxable-equivalent basis, total revenues of $1.58 billion were up 5% year over year. The top line beat the Zacks Consensus Estimate by 0.32%.
NII of $344 million in the second quarter declined 9% year over year mainly on lower net interest margin, negated by a rise in average earning assets to some extent.
NIM was 0.97%, shrinking 25 basis points from the prior-year quarter. The decline chiefly reflects the impact of lower interest rates.
Non-interest income improved 10% from the year-ago quarter to $1.24 billion. Trust, investment and other servicing fees summed $1.07 billion, up 12% year over year.
Non-interest expenses jumped 8% year over year to $1.12 billion in the second quarter. The upswing mainly resulted from an elevation in compensation, employee benefits, equipment and software and outside service expenses.
Assets Under Management and Custody Rise
As of Jun 30, 2021, Northern Trust’s total AUC climbed 32% year over year to $12.2 trillion, while total AUM increased 22% to $1.54 trillion.
Credit Quality: A Mixed Bag
Credit metrics in the June-ended quarter showed a mixed trend. The company released credit loss reserves of $27 million in the second quarter against provisions of $66 million reported in the prior-year quarter. Net recoveries were $3.2 million compared with $2.6 million reported in the year-ago quarter.
Total allowance for credit losses was $207 million, down 22% year over year. However, total non-accrual assets rose 7.3% to $106.7 million as of Jun 30, 2021.
Capital Position Strong
Under the Advanced Approach, as of Jun 30, 2021, Common Equity Tier 1 capital ratio, total capital ratio and Tier 1 leverage ratio came in at 13.1%, 15.5% and 7.1% compared with 13.9%, 16.8% and 7.6%, respectively, witnessed in the prior-year quarter. All ratios exceeded regulatory requirements.
Return on average common equity was 13.7% compared with the year-earlier quarter’s 12.2%. Return on average assets was 0.96% compared with 0.91% witnessed in the year-ago quarter.
Capital Deployment Activities
In the quarter, the company returned $178.3 million to shareholders through share repurchases and dividends. The company repurchased $135.6 million of common stock under its share repurchase program.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Northern Trust Corporation has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Northern Trust Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.