Stock Analysis

Bank of N.T. Butterfield & Son's (NYSE:NTB) 14% CAGR outpaced the company's earnings growth over the same three-year period

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Buying a low-cost index fund will get you the average market return. But if you invest in individual stocks, some are likely to underperform. Unfortunately for shareholders, while the The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) share price is up 24% in the last three years, that falls short of the market return. Zooming in, the stock is actually down 6.9% in the last year.

Since the stock has added US$73m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Though if you're not interested in researching what drove NTB's performance, we have a free list of interesting investing ideas to potentially inspire your next investment!

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Bank of N.T. Butterfield & Son was able to grow its EPS at 0.3% per year over three years, sending the share price higher. In comparison, the 7% per year gain in the share price outpaces the EPS growth. This suggests that, as the business progressed over the last few years, it gained the confidence of market participants. It is quite common to see investors become enamoured with a business, after a few years of solid progress.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

NYSE:NTB Earnings Per Share Growth October 5th 2022

We know that Bank of N.T. Butterfield & Son has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Bank of N.T. Butterfield & Son will grow revenue in the future.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Bank of N.T. Butterfield & Son, it has a TSR of 47% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

While it's never nice to take a loss, Bank of N.T. Butterfield & Son shareholders can take comfort that , including dividends,their trailing twelve month loss of 2.1% wasn't as bad as the market loss of around 17%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 4% for each year. In the best case scenario the last year is just a temporary blip on the journey to a brighter future. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Bank of N.T. Butterfield & Son you should be aware of.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

What are the risks and opportunities for Bank of N.T. Butterfield & Son?

The Bank of N.T. Butterfield & Son Limited provides a range of community, commercial, and private banking services to individuals and small to medium-sized businesses.

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  • Trading at 61.3% below our estimate of its fair value

  • Earnings are forecast to grow 8.48% per year

  • Earnings grew by 18.1% over the past year


No risks detected for NTB from our risks checks.

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Further research on
Bank of N.T. Butterfield & Son

ValuationFinancial HealthInsider TradingManagement Team


Bank of N.T. Butterfield & Son

The Bank of N.T. Butterfield & Son Limited provides a range of community, commercial, and private banking services to individuals and small to medium-sized businesses.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Future Growth2
Past Performance6
Financial Health5

Read more about these checks in the individual report sections or in our analysis model.

Very undervalued with outstanding track record and pays a dividend.