NasdaqGS:NTRS.P

Stock Analysis Report

Executive Summary

Northern Trust Corporation, a financial holding company, provides wealth management, asset servicing, asset management, and banking solutions for corporations, institutions, families, and individuals worldwide.

Rewards

Trading at 2.7% below its fair value

Earnings have grown 13.9% per year over the past 5 years

Pays a high and reliable dividend of 2.6%

Risk Analysis

No risks detected for NTRS.P from our risk checks.


Snowflake Analysis

Excellent balance sheet established dividend payer.


Similar Companies

Share Price & News

How has Northern Trust's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: NTRS.P has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0.08%

NTRS.P

2.4%

US Capital Markets

2.0%

US Market


1 Year Return

-0.8%

NTRS.P

19.0%

US Capital Markets

23.6%

US Market

Return vs Industry: NTRS.P underperformed the US Capital Markets industry which returned 21.7% over the past year.

Return vs Market: NTRS.P underperformed the US Market which returned 24.7% over the past year.


Shareholder returns

NTRS.PIndustryMarket
7 Day0.08%2.4%2.0%
30 Day-1.3%3.8%3.9%
90 Day-1.5%15.0%12.0%
1 Year5.0%-0.8%21.4%19.0%26.2%23.6%
3 Year16.0%-2.0%48.9%40.5%53.2%43.3%
5 Year31.8%-0.3%96.0%77.8%75.7%56.3%

Price Volatility Vs. Market

How volatile is Northern Trust's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Northern Trust undervalued compared to its fair value and its price relative to the market?

2.7%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: NTRS.P ($25.01) is trading below our estimate of fair value ($25.7)

Significantly Below Fair Value: NTRS.P is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: NTRS.P is good value based on its PE Ratio (15.9x) compared to the Capital Markets industry average (36.1x).

PE vs Market: NTRS.P is good value based on its PE Ratio (15.9x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: NTRS.P is poor value based on its PEG Ratio (145.1x)


Price to Book Ratio

PB vs Industry: NTRS.P is good value based on its PB Ratio (2.3x) compared to the US Capital Markets industry average (6.6x).


Next Steps

Future Growth

How is Northern Trust forecast to perform in the next 1 to 3 years based on estimates from 15 analysts?

0.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: NTRS.P's forecast earnings growth (0.1% per year) is below the savings rate (1.7%).

Earnings vs Market: NTRS.P's earnings (0.1% per year) are forecast to grow slower than the US market (14.3% per year).

High Growth Earnings: NTRS.P's earnings are forecast to grow, but not significantly.

Revenue vs Market: NTRS.P's revenue (2.3% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: NTRS.P's revenue (2.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: NTRS.P's Return on Equity is forecast to be low in 3 years time (15.5%).


Next Steps

Past Performance

How has Northern Trust performed over the past 5 years?

13.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: NTRS.P has high quality earnings.

Growing Profit Margin: NTRS.P's current net profit margins (24.3%) are lower than last year (24.4%).


Past Earnings Growth Analysis

Earnings Trend: NTRS.P's earnings have grown by 13.9% per year over the past 5 years.

Accelerating Growth: NTRS.P's earnings growth over the past year (2%) is below its 5-year average (13.9% per year).

Earnings vs Industry: NTRS.P earnings growth over the past year (2%) underperformed the Capital Markets industry 20.6%.


Return on Equity

High ROE: NTRS.P's Return on Equity (14.2%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Northern Trust's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: NTRS.P has a low level of unsold assets or inventory.

Debt Coverage by Assets: NTRS.P's debt is covered by short term assets (assets are 2.8x debt).


Financial Institutions Analysis

Asset Level: NTRS.P's level of assets compared to its equity is moderate.

Allowance for Bad Loans: NTRS.P has a low allowance for bad loans.

Low Risk Liabilities: NTRS.P's liabilities are made up of primarily low risk sources of funding.

Loan Level: NTRS.P has an acceptable proportion of non-loan assets held.

Low Risk Deposits: NTRS.P's loans are broadly funded by customer deposits.

Level of Bad Loans: NTRS.P has an appropriate level of bad loans (0.37%)


Next Steps

Dividend

What is Northern Trust's current dividend yield, its reliability and sustainability?

2.60%

Current Dividend Yield


Dividend Yield vs Market

company2.6%marketbottom25%1.4%markettop25%3.7%industryaverage1.8%forecastin3Years2.8%

Current dividend yield vs market & industry

Notable Dividend: NTRS.P's dividend (2.6%) is higher than the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: NTRS.P's dividend (2.6%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: NTRS.P's dividends per share have been stable in the past 10 years.

Growing Dividend: NTRS.P's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (36.3%), NTRS.P's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: NTRS.P's dividends in 3 years are forecast to be well covered by earnings (49.1% payout ratio).


Next Steps

Management

What is the CEO of Northern Trust's salary, the management and board of directors tenure and is there insider trading?

5.5yrs

Average management tenure


CEO

Mike O’Grady (53yo)

2yrs

Tenure

US$7,971,986

Compensation

Mr. Michael G. O'Grady, also known as Mike, has been the Chairman of Northern Trust Corporation and Northern Trust Company since January 23, 2019. Mr. O'Grady has been the President and Chief Executive off ...


CEO Compensation Analysis

Compensation vs Market: Mike's total compensation ($USD7.97M) is about average for companies of similar size in the US market ($USD10.76M).

Compensation vs Earnings: Mike's compensation has increased by more than 20% in the past year.


Management Age and Tenure

5.5yrs

Average Tenure

54yo

Average Age

Experienced Management: NTRS.P's management team is seasoned and experienced (5.5 years average tenure).


Board Age and Tenure

8.2yrs

Average Tenure

63yo

Average Age

Experienced Board: NTRS.P's board of directors are considered experienced (8.2 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Steve Fradkin (57yo)

    Executive VP & President of Wealth Management

    • Tenure: 17yrs
    • Compensation: US$4.10m
  • Ian Headon

    Head of Depositary Regulatory & Technical Services

    • Pete Cherecwich (54yo)

      Executive VP and President of Corporate & Institutional Services

      • Compensation: US$4.08m
    • Stephen Bowman (55yo)

      Executive VP & CFO

      • Tenure: 5.3yrs
      • Compensation: US$3.74m
    • Susan Levy (61yo)

      Executive VP

      • Tenure: 5.7yrs
    • Mike O’Grady (53yo)

      Chairman

      • Tenure: 2yrs
      • Compensation: US$7.97m
    • Bob Browne (54yo)

      Executive VP & Chief Investment Officer

      • Tenure: 11yrs
    • K. Mannard

      Chief Marketing & Communications Officer

      • Mark Bette

        Senior VP

        • Thomas South (49yo)

          Executive VP & Chief Information Officer

          • Tenure: 2yrs

        Board Members

        • Martin Slark (65yo)

          Independent Director

          • Tenure: 8.8yrs
          • Compensation: US$254.96k
        • Susan Crown (60yo)

          Independent Director

          • Tenure: 23yrs
          • Compensation: US$229.96k
        • Linda Bynoe (67yo)

          Independent Director

          • Tenure: 13.8yrs
          • Compensation: US$234.96k
        • David H. Smith (52yo)

          Independent Director

          • Tenure: 9.8yrs
          • Compensation: US$254.96k
        • Charles Tribbett (63yo)

          Independent Director

          • Tenure: 15yrs
          • Compensation: US$234.96k
        • R. Magill

          Vice Chairman for Wealth Management

          • Tenure: 1yrs
        • Dean Harrison (64yo)

          Independent Director

          • Tenure: 5yrs
          • Compensation: US$239.96k
        • Mike O’Grady (53yo)

          Chairman

          • Tenure: 2yrs
          • Compensation: US$7.97m
        • Jay Henderson (63yo)

          Lead Director

          • Tenure: 0.8yrs
          • Compensation: US$239.96k
        • Hidehiro Nakayama

          President & Representative Director of Northern Trust Global Investments Japan

          • Tenure: 7.6yrs

        Company Information

        Northern Trust Corporation's company bio, employee growth, exchange listings and data sources


        Key Information

        • Name: Northern Trust Corporation
        • Ticker: NTRS.P
        • Exchange: NasdaqGS
        • Founded: 1889
        • Industry: Asset Management and Custody Banks
        • Sector: Diversified Financials
        • Market Cap: US$22.794b
        • Shares outstanding: 211.88m
        • Website: https://www.northerntrust.com

        Number of Employees


        Location

        • Northern Trust Corporation
        • 50 South La Salle Street
        • Chicago
        • Illinois
        • 60603
        • United States

        Listings

        TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
        NTRSNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDJan 1969
        NT4DB (Deutsche Boerse AG)YesCommon StockDEEURJan 1969
        NTRS *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJan 1969
        0K91LSE (London Stock Exchange)YesCommon StockGBUSDJan 1969
        NTRS.PNasdaqGS (Nasdaq Global Select)DEP SHS RP PFD CUSUSDAug 2014
        NTRS.ONasdaqGS (Nasdaq Global Select)4.7 DPRP PFD EUSUSDOct 2019

        Biography

        Northern Trust Corporation, a financial holding company, provides wealth management, asset servicing, asset management, and banking solutions for corporations, institutions, families, and individuals worldwide. It operates in two segments, Corporate & Institutional Services (C&IS) and Wealth Management. The C&IS segment offers asset servicing and related services, including custody, fund administration, investment operations outsourcing, investment management, investment risk and analytical services, employee benefit services, securities lending, foreign exchange, treasury management, brokerage services, transition management services, banking, and cash management services. This segment serves corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds, and other institutional investors. The Wealth Management segment offers trust, investment management, custody, and philanthropic; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services; and private and business banking services. This segment serves high-net-worth individuals and families, business owners, executives, professionals, retirees, and established privately-held businesses. The company also provides asset management services, such as active and passive equity; active and passive fixed income; cash management; alternative asset classes comprising private equity and hedge funds of funds; and multi-manager advisory services and products through separately managed accounts, bank common and collective funds, registered investment companies, exchange traded funds, non-U.S. collective investment funds, and unregistered private investment funds. In addition, it offers overlay and other risk management services. The company was founded in 1889 and is headquartered in Chicago, Illinois. 


        Company Analysis and Financial Data Status

        All financial data provided by Standard & Poor's Capital IQ.
        DataLast Updated (UTC time)
        Company Analysis2020/01/03 00:51
        End of Day Share Price2019/12/31 00:00
        Earnings2019/09/30
        Annual Earnings2018/12/31


        Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.