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Based on Northern Trust Corporation’s (NASDAQ:NTRS) recently announced earnings update on 31 December 2018, analyst forecasts appear to be pessimistic, with earnings expected to decline by -3.9% in the upcoming year against the past 5-year average growth rate of 14%. With trailing-twelve-month net income at current levels of US$1.5b, the consensus growth rate suggests that earnings will decline to US$1.4b by 2020. Below is a brief commentary around Northern Trust’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.
How is Northern Trust going to perform in the near future?
Over the next three years, it seems the consensus view of the 15 analysts covering NTRS is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of NTRS’s earnings growth over these next few years.
This results in an annual growth rate of 1.5% based on the most recent earnings level of US$1.5b to the final forecast of US$1.6b by 2022. EPS reaches $7.71 in the final year of forecast compared to the current $6.68 EPS today. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 25% to 24% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Northern Trust, I’ve compiled three important aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Northern Trust worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Northern Trust is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Northern Trust? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.