Northern Trust (NTRS): Valuation in Focus After Securing Major £5 Billion AJ Bell Asset Servicing Mandate

Northern Trust (NTRS) shares caught investors’ attention after the company and Carne Group were selected by AJ Bell, a major UK investment platform, for asset servicing duties covering roughly £5 billion in multi-asset funds.

See our latest analysis for Northern Trust.

These high-profile client wins are giving Northern Trust a solid boost in investor sentiment, reflected in a year-to-date share price return of 27.5%. While recent weeks have seen steady performance, the company’s three-year total shareholder return of 58.5% highlights sustained momentum that has attracted both new business and market attention.

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With shares sitting near their analyst price target after strong client wins and robust shareholder returns, the key question for investors becomes whether there is still value to be found in Northern Trust, or if the market is already factoring in additional growth.

Most Popular Narrative: 2.3% Undervalued

Against Northern Trust’s last close price of $131.34, the most popular narrative estimates fair value near $134.50. The setup for this number comes from a close look at the drivers and assumptions fueling the experts’ outlook.

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. However, 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.

Why do analysts stick with a higher fair value despite so many forces in play? There is a reason the narrative expects tighter margins and a rethink on profit growth, but it also hints at bold projections for earnings, margins, and valuation multiples. Want to peek inside those assumptions and see why this calculation defies cautious expectations?

Result: Fair Value of $134.50 (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 tech-driven efficiency gains could quickly challenge expectations of modest growth and shrinking margins.

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

Another View: DCF Model Raises Caution

While the current consensus points to Northern Trust being slightly undervalued, our SWS DCF model suggests a more cautious take. The DCF approach estimates fair value closer to $118.07, which implies the shares might now be trading above their intrinsic worth. Is the optimistic forecast overstating long-term growth?

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 920 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 see things differently or want to dig deeper into the numbers yourself, you can easily craft your own view in just a few minutes. Do it your way

A great starting point for your Northern Trust research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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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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