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State Street Corporation Message Board

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  • smisoltr06 smisoltr06 Dec 12, 2009 10:05 AM Flag

    where is STT heading?

    I have to say that I am impressed with the level of knowledge people have on here. was wondering if anyone would dare take a stab at what can be expected from the financials reporting in January. Looking at STT it took off last Quarterly earning season which started with GS, JPM etc. And it rose to above $55 before STT even reported. But once it reported, it was straight down. Anyone expect banks earnings to outpace Q3? I mean, the banks have been dead money for the past 2 months, very tight trading ranges and no real momentum to the upside. Can earning spark another run in the financials? I think that STT might benefit from another run up. Anyone's thoughts?

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    • Hi smiso,

      We know past performance is no guarantee of future results. Having said that we can look at the immediate past record.

      The record shows STT has surpassed earnings expectations for the past 4 quarters with 1.58, 1.04, 1.04 and 1.05 for 4Q 2008 thru 3Q 2009. Average earnings expectations for 4Q 2009 are 1.00 per share.

      It is not expected that 4Q 2009 earnings should outpace 3Q. In fact 3Q came in a penny over expectations whereas in the previous 3 quarters the surprise factor was higher. This may have been a letdown for some investors who were expecting a much higher surprise factor (possible earnings of 1.10). Those disappointed folks may have sold and helped the stock price drop below $50.

      The earnings report for 4Q 2009 may have a different effect on investors if only expected earnings are met without any plus-side surprise factor. This is because not many people are expecting higher than expected earnings.

      Here, the market psychology has changed and most realists recognize the financial markets are in uncharted waters and it is no longer business as usual.

      STT has paid back the TARP funds they didn't want in the first place. The company appears to be continuing to do good business and running a tight ship. The only wild card seems to be the bogus "Jerry Brown for Governor" lawsuit along with a few other kooks.

      But, by and large, without the knowledge of some impending disaster, it is my feeling that STT should do very well in 2010 as the worldwide economy heals and gains strength.

      Who said I was longwinded (LOL).


      • 2 Replies to tombardux
      • Tom,
        I like your insight and your disclosure. Past performance is no indication of future performance. You must have worked in the financial industry. Hehe... But I agree with most things you mentioned. Curious as to why the Q4 earnings for STT were lowered from 1.04(Q3) to 1.00 per share. Recently STT has made an acquisition, I believe a UK hedge fund, and won a huge contract from MS. So there are things to look forward to in 2010. However, just today Obama is on every media outlet slamming the financial sector, I thought this was over with but I guess not. The government is alienating the banks, and instead of instilling confidence, all the political chatter is not helping the banking industry.

      • I think you are underestimating the fear from lawsuits vs everyone that sold the stock. The 80 mil settlement was a large chunk. The increase of the legal fund was even larger chunk. STT tried to hide it in 3rd quarter by knocking the earnings down to 60 cents, thinking investors sold off anyway. But that's not reflected in your analysis. Which makes either 3Q really disappointing or 4Q bad but you can't just take it out of both quarters. Also, there is the fear of more lawsuits to follow. The acquisition cost weighs down as well.

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