NasdaqGS:NTRS

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 8.4% below its fair value

Earnings are forecast to grow 2.51% per year

Pays a high and reliable dividend of 2.78%

Risk Analysis

No risks detected for NTRS from our risk checks.


Snowflake Analysis

Flawless 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 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-2.0%

NTRS

0.2%

US Capital Markets

0.06%

US Market


1 Year Return

8.4%

NTRS

17.8%

US Capital Markets

19.4%

US Market

Return vs Industry: NTRS underperformed the US Capital Markets industry which returned 17.8% over the past year.

Return vs Market: NTRS underperformed the US Market which returned 19.4% over the past year.


Shareholder returns

NTRSIndustryMarket
7 Day-2.0%0.2%0.06%
30 Day-7.8%0.2%1.1%
90 Day-5.1%6.8%8.9%
1 Year11.4%8.4%20.2%17.8%21.9%19.4%
3 Year22.1%14.5%38.8%30.9%48.9%39.3%
5 Year57.5%41.8%81.4%64.5%71.9%53.1%

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

Valuation

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

8.4%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: NTRS ($100.83) is trading below our estimate of fair value ($110.08)

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


Price To Earnings Ratio

PE vs Industry: NTRS is good value based on its PE Ratio (15.1x) compared to the Capital Markets industry average (36x).

PE vs Market: NTRS is good value based on its PE Ratio (15.1x) compared to the US market (18.3x).


Price to Earnings Growth Ratio

PEG Ratio: NTRS is poor value based on its PEG Ratio (6x)


Price to Book Ratio

PB vs Industry: NTRS is good value based on its PB Ratio (2.2x) 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 14 analysts?

2.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: NTRS's forecast earnings growth (2.5% per year) is above the savings rate (1.7%).

Earnings vs Market: NTRS's earnings (2.5% per year) are forecast to grow slower than the US market (14.2% per year).

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

Revenue vs Market: NTRS's revenue (3.1% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: NTRS's revenue (3.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: NTRS's Return on Equity is forecast to be low in 3 years time (14.6%).


Next Steps

Past Performance

How has Northern Trust performed over the past 5 years?

13.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: NTRS has high quality earnings.

Growing Profit Margin: NTRS's current net profit margins (23.5%) are lower than last year (25%).


Past Earnings Growth Analysis

Earnings Trend: NTRS's earnings have grown by 13.2% per year over the past 5 years.

Accelerating Growth: NTRS's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: NTRS had negative earnings growth (-4.1%) over the past year, making it difficult to compare to the Capital Markets industry average (8.4%).


Return on Equity

High ROE: NTRS's Return on Equity (13.5%) 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 has a low level of unsold assets or inventory.

Debt Coverage by Assets: NTRS's debt is covered by short term assets (assets are 3.4x debt).


Financial Institutions Analysis

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

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

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

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

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

Level of Bad Loans: NTRS has an appropriate level of bad loans (0.22%)


Next Steps

Dividend

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

2.78%

Current Dividend Yield


Upcoming Dividend Payment

TodayFeb 19 2020Ex Dividend DateMar 12 2020Dividend Pay DateApr 01 202020 days from Ex DividendBuy in the next 22 days to receive upcoming dividend

Dividend Yield vs Market

company2.8%marketbottom25%1.4%markettop25%3.7%industryaverage1.9%forecastin3Years3.0%

Current dividend yield vs market & industry

Notable Dividend: NTRS's dividend (2.78%) is higher than the bottom 25% of dividend payers in the US market (1.43%).

High Dividend: NTRS's dividend (2.78%) is low compared to the top 25% of dividend payers in the US market (3.7%).


Stability and Growth of Payments

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

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


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (39%), NTRS's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: NTRS's dividends in 3 years are forecast to be well covered by earnings (46.3% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

5.8yrs

Average management tenure


CEO

Mike O’Grady (53yo)

2.1yrs

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 ($USD7.97M) is about average for companies of similar size in the US market ($USD10.78M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Michael O’Grady
Chairman2.1yrsUS$7.97m0.052% $10.9m
Steven Fradkin
Executive VP & President of Wealth Management17.1yrsUS$4.10m0.080% $16.9m
Peter Cherecwich
Executive VP and President of Corporate & Institutional Services0yrsUS$4.08m0.023% $4.9m
Jason Tyler
CFO & Executive VP0yrsno data0.0054% $1.2m
Robert Browne
Executive VP & Chief Investment Officer11.1yrsno data0.0085% $1.8m
Ian Headon
Head of Depositary Regulatory & Technical Services0yrsno datano data
Thomas South
Executive VP & Chief Information Officer2.1yrsno data0.0027% $566.6k
Mark Bette
Senior VP0yrsno datano data
Susan Levy
Executive VP5.8yrsno data0.019% $4.1m
K. Mannard
Chief Marketing & Communications Officer0yrsno datano data

5.8yrs

Average Tenure

54yo

Average Age

Experienced Management: NTRS's management team is seasoned and experienced (5.8 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Michael O’Grady
Chairman2.1yrsUS$7.97m0.052% $10.9m
Hidehiro Nakayama
President & Representative Director of Northern Trust Global Investments Japan7.7yrsno datano data
Martin Slark
Independent Director8.8yrsUS$254.96k0.0071% $1.5m
Susan Crown
Independent Director23.1yrsUS$229.96k0.17% $36.6m
Linda Bynoe
Independent Director13.8yrsUS$234.96k0.00095% $201.6k
David H. Smith
Independent Director9.8yrsUS$254.96k0.67% $141.7m
Charles Tribbett
Independent Director15.1yrsUS$234.96k0.00048% $101.9k
R. Magill
Vice Chairman for Wealth Management1.1yrsno datano data
Dean Harrison
Independent Director5.1yrsUS$239.96k0.00050% $106.1k
Jay Henderson
Lead Director0.8yrsUS$239.96k0.0035% $749.2k

8.3yrs

Average Tenure

63yo

Average Age

Experienced Board: NTRS's board of directors are considered experienced (8.3 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: NTRS insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

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


Top Shareholders

Company Information

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


Key Information

  • Name: Northern Trust Corporation
  • Ticker: NTRS
  • Exchange: NasdaqGS
  • Founded: 1889
  • Industry: Asset Management and Custody Banks
  • Sector: Diversified Financials
  • Market Cap: US$21.223b
  • Shares outstanding: 209.71m
  • 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.ONasdaqGS (Nasdaq Global Select)4.7 DPRP PFD EUSUSDOct 2019
N1TR34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 2 REPR 1 COMBRBRLJan 2020

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 Analysis2020/02/18 23:59
End of Day Share Price2020/02/18 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


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.