Butterfield (NYSE:NTB) Profit Margin Rises to 38%, Reinforcing Value Narrative Despite Forecast Earnings Decline

Bank of N.T. Butterfield & Son (NYSE:NTB) is projecting a marginal annual revenue decline of 0.02% and an earnings drop of 5.1% per year over the next three years. Even as the outlook signals softer financials ahead, the company’s net profit margin grew to 38%, up from last year's 36.7%. Annual earnings have averaged 9% growth over the past five years, with the most recent year coming in just below that at 8.3% growth. Current market sentiment may be balancing concerns about declining future results against the company’s track record of profit growth and expanding margins.

See our full analysis for Bank of N.T. Butterfield & Son.

Now, we will take a closer look at how these headline results compare to the narratives shaping discussion around the stock. Some themes will hold up, while others could get turned upside down by the latest numbers.

See what the community is saying about Bank of N.T. Butterfield & Son

Profit Margin Sits at 38%

• Net profit margin is now 38%, above last year’s 36.7%, pointing to improved efficiency as the bank withstands modest earnings pressure even as revenue bases flatten out.
• Analysts' consensus view highlights that expansion in global wealth management and private trust sectors may help support diversified, stable fee-based revenue streams and keep operational efficiency high.
  • This plays against concerns about shrinking interest margins and reliance on vulnerable island economies, as fee-based segments and wealth management may help soften the impact from pressured lending business.
  • Continued investment in digital transformation is expected to contain costs and boost profit margins, reinforcing the expectation that operational gains can partly buffer expected profit headwinds.

📊 Read the full Bank of N.T. Butterfield & Son Consensus Narrative.

PE Ratio of 7.9x Signals Discount

• At 7.9x, NTB trades well below the US Banks industry average of 11.2x and also below the peer average of 21.7x. This suggests investors are pricing in more risk or slower growth than the industry as a whole.
• Analysts' consensus view notes that the combination of comparatively low valuation and a history of high-quality earnings skews the risk/reward equation toward value, with the key tension being whether earnings slippage will be as severe as consensus expects.
  • The DCF fair value for NTB is $153.83, vastly higher than the current share price of $44.34. This emphasizes how much downside has already been factored in by the market.
  • Regardless of where the price settles, the company’s ability to maintain robust profit margins and steady fee-based revenue could drive sentiment if future earnings hold firmer than expected.

Share Price 13% Below Analyst Target

• The current share price of $44.34 is 13% below the latest analyst consensus target of $50.50. This underlines a modest gap between market value and what analysts believe is justified by next several years’ projected earnings and profitability.
• Analysts' consensus view argues that the analyst target implies modest confidence in Butterfield’s ability to support $594.7 million in revenue and $194.4 million net income by 2028, while maintaining respectable margins even as risks around deposit stability and local economies remain front of mind.
  • The expectation for shares outstanding to shrink by nearly 7% per year may help underpin earnings per share, potentially offsetting some headline earnings decline and bolstering the long-term case.
  • However, ongoing margin compression and cost pressures will test whether underlying earnings can stay close to analyst forecasts, keeping the outlook sensitive to both operational execution and macro conditions.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Bank of N.T. Butterfield & Son on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your Bank of N.T. Butterfield & Son research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

See What Else Is Out There

Despite Butterfield’s history of profit margin expansion, its ongoing margin compression and exposure to earnings volatility raise concerns about consistent, reliable long-term growth.

If steady gains matter to you, use our stable growth stocks screener (2122 results) to quickly discover companies that have delivered resilient revenue and earnings growth cycle after cycle.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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