Northern Trust (NTRS): Gauging Valuation After Recent Steady Share Performance

Northern Trust (NTRS) shares have moved minimally over the past week, catching the attention of market watchers interested in the bank’s steady momentum. Investors are now considering the company’s performance trends and the broader industry outlook.

See our latest analysis for Northern Trust.

After a year of solid performance, Northern Trust’s share price is up more than 26% year-to-date and its total shareholder return tops 38% over the past twelve months. Momentum is clearly building as investors respond favorably to the company’s consistent results and steady trend of earnings growth.

If you’re tracking these kinds of moves, now is a smart time to broaden your search. Discover fast growing stocks with high insider ownership

Yet with share prices near all-time highs and only a small gap to analyst targets, the key question remains: Is Northern Trust now undervalued, or has the market already priced in the bank’s next chapter of growth?

Most Popular Narrative: 2.5% Undervalued

Northern Trust’s most influential valuation narrative suggests the shares are trading below fair value, with a calculated fair price only slightly above the latest closing price of $129.88. The narrative guides its outlook by balancing expected earnings, margin trends, and industry-specific catalysts against the present market enthusiasm.

The company's recent organic growth and margin expansion are largely attributed to near-term operational efficiencies and balance sheet optimization (notably lower expense growth and improved operating leverage). Yet, investors may be overestimating the persistence of these improvements in light of ongoing industry fee pressure from the growing shift to passive investing and ETFs, which is likely to constrain long-term revenue growth and profit margins.

Read the complete narrative.

Behind this number? The logic revolves around shifting industry economics, expectations of efficient cost-cutting, and a crucial earnings outlook which only a deeper dive reveals. What hidden levers and precise profit assumptions are driving this standout price target? The real story is beneath the surface. Click through and see what analysts believe powers Northern Trust’s potential.

Result: Fair Value of $133.21 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, a rapid surge in private markets or successful technology investment could defy current expectations. This could position Northern Trust for stronger-than-predicted growth.

Find out about the key risks to this Northern Trust narrative.

Another View: Discounted Cash Flow Model Raises a Red Flag

While analyst and peer comparison suggest Northern Trust may still have room to run, our DCF model highlights a different story. The SWS DCF model indicates shares are trading well above their estimated fair value of $110.14, which poses the risk that optimism could be overstated. Could this disconnect signal volatility ahead, or is there more left in this rally?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Northern Trust for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Northern Trust Narrative

If you have a different perspective or want to dive deeper, you can craft your own Northern Trust narrative in just a few minutes. Do it your way.

A great starting point for your Northern Trust research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

Looking for More Investment Ideas?

Don’t miss your chance to find your next potential winner. Tap into fresh themes and fast-moving opportunities trusted by active investors who never settle for average.

• Uncover income opportunities and see which companies stand out as potential yield leaders in these 18 dividend stocks with yields > 3%.
• Catalyze your strategy by spotting breakthrough innovators in the space with these 33 healthcare AI stocks.
• Unlock value with companies trading below their intrinsic worth by starting your search on these 870 undervalued stocks based on cash flows.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com