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Northern Trust Corporation (NTRS) Down 3.1% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Northern Trust Corporation (NTRS - Free Report) . Shares have lost about 3.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Northern Trust Corporation due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Northern Trust Q3 Earnings & Revenues Top, Costs Flare Up
Northern Trust has reported third-quarter 2021 earnings per share of $1.80, which surpassed the Zacks Consensus Estimate of $1.67 on the release of credit reserves. The bottom line increased from $1.32 year over year.
Results were positively impacted by an increase in NII and fee income. A rise in AUC and AUM were the driving factors. Credit reserve release was a tailwind. However, contraction of margin and rising operating expenses were major drags.
Net income in the quarter was $395.7 million, up 34% year over year.
Revenues Climb, Costs Shoot Up
On a fully-taxable-equivalent basis, total revenues of $1.63 billion were up 10% year over year. The top line beat the Zacks Consensus Estimate of $1.61 billion.
The NII of $357.1 million in the third quarter inched up 1.8%, year over year, mainly on rise in average earning assets to some extent.
NIM came in at 0.98%, shrinking 5 basis points from the prior-year quarter. This decline chiefly reflects lower average interest rates, partially offset by a favorable balance-sheet volume and mix shift.
Non-interest income improved marginally from the year-ago quarter to $1.29 billion. Trust, investment and other servicing fees summed $1.11 billion, up 11% year over year.
Non-interest expenses flared up marginally year over year to $1.13 billion during the third quarter. This upswing chiefly resulted from an elevation in all components other than other operating expenses.
AUM And AUC Rise
As of Sep 30, 2021, Northern Trust’s total AUC climbed 21% year over year to $12.3 trillion, while total AUM increased 17% to $1.53 trillion.
Credit Quality: A Mixed Bag
Credit metrics during the September-ended quarter showed a mixed trend. The company released credit loss reserves of $13 million in the third quarter against provisions of $0.5 million reported in the prior-year quarter. Net recoveries were $1.1 million compared with the $0.4 million reported in the year-ago quarter. Total allowance for credit losses was $195.1 million, down 27% year over year.
However, total non-accrual assets rose 43% to $141.2 million as of Sep 30, 2021.
Capital Position Mixed
Under the Advanced Approach, as of Sep 30, 2021, Common Equity Tier 1 capital ratio, total capital ratio and Tier 1 leverage ratio came in at 13%, 15.4% and 7.1% compared with 13.9%, 16.7% and 7.7%, respectively, witnessed in the prior-year quarter. All ratios exceeded regulatory requirements.
Return on average common equity was 13.7% compared with the year-earlier quarter’s 10.5%. Return on average assets was 1% compared with the 0.83% witnessed in the year-ago quarter.
Capital Deployment Activities
During the quarter, the company returned $248 million to shareholders through share repurchases and dividends. The company repurchased $100 million of common stock under its share-repurchase program.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Northern Trust Corporation has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Northern Trust Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Northern Trust Corporation (NTRS) Down 3.1% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Northern Trust Corporation (NTRS - Free Report) . Shares have lost about 3.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Northern Trust Corporation due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Northern Trust Q3 Earnings & Revenues Top, Costs Flare Up
Northern Trust has reported third-quarter 2021 earnings per share of $1.80, which surpassed the Zacks Consensus Estimate of $1.67 on the release of credit reserves. The bottom line increased from $1.32 year over year.
Results were positively impacted by an increase in NII and fee income. A rise in AUC and AUM were the driving factors. Credit reserve release was a tailwind. However, contraction of margin and rising operating expenses were major drags.
Net income in the quarter was $395.7 million, up 34% year over year.
Revenues Climb, Costs Shoot Up
On a fully-taxable-equivalent basis, total revenues of $1.63 billion were up 10% year over year. The top line beat the Zacks Consensus Estimate of $1.61 billion.
The NII of $357.1 million in the third quarter inched up 1.8%, year over year, mainly on rise in average earning assets to some extent.
NIM came in at 0.98%, shrinking 5 basis points from the prior-year quarter. This decline chiefly reflects lower average interest rates, partially offset by a favorable balance-sheet volume and mix shift.
Non-interest income improved marginally from the year-ago quarter to $1.29 billion. Trust, investment and other servicing fees summed $1.11 billion, up 11% year over year.
Non-interest expenses flared up marginally year over year to $1.13 billion during the third quarter. This upswing chiefly resulted from an elevation in all components other than other operating expenses.
AUM And AUC Rise
As of Sep 30, 2021, Northern Trust’s total AUC climbed 21% year over year to $12.3 trillion, while total AUM increased 17% to $1.53 trillion.
Credit Quality: A Mixed Bag
Credit metrics during the September-ended quarter showed a mixed trend. The company released credit loss reserves of $13 million in the third quarter against provisions of $0.5 million reported in the prior-year quarter. Net recoveries were $1.1 million compared with the $0.4 million reported in the year-ago quarter. Total allowance for credit losses was $195.1 million, down 27% year over year.
However, total non-accrual assets rose 43% to $141.2 million as of Sep 30, 2021.
Capital Position Mixed
Under the Advanced Approach, as of Sep 30, 2021, Common Equity Tier 1 capital ratio, total capital ratio and Tier 1 leverage ratio came in at 13%, 15.4% and 7.1% compared with 13.9%, 16.7% and 7.7%, respectively, witnessed in the prior-year quarter. All ratios exceeded regulatory requirements.
Return on average common equity was 13.7% compared with the year-earlier quarter’s 10.5%. Return on average assets was 1% compared with the 0.83% witnessed in the year-ago quarter.
Capital Deployment Activities
During the quarter, the company returned $248 million to shareholders through share repurchases and dividends. The company repurchased $100 million of common stock under its share-repurchase program.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Northern Trust Corporation has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Northern Trust Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.