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Earnings Beat: Northern Trust Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Simply Wall St
·4 min read

Northern Trust Corporation (NASDAQ:NTRS) shareholders are probably feeling a little disappointed, since its shares fell 2.2% to US$76.03 in the week after its latest quarterly results. Northern Trust reported US$1.5b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.46 beat expectations, being 6.5% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Northern Trust after the latest results.

View our latest analysis for Northern Trust

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Following last week's earnings report, Northern Trust's 13 analysts are forecasting 2020 revenues to be US$6.06b, approximately in line with the last 12 months. Statutory earnings per share are expected to decline 11% to US$5.74 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$6.06b and earnings per share (EPS) of US$5.73 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of US$84.06, showing that the business is executing well and in line with expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Northern Trust at US$95.00 per share, while the most bearish prices it at US$73.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 0.01% revenue decline a notable change from historical growth of 6.4% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.3% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Northern Trust is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Northern Trust going out to 2022, and you can see them free on our platform here..

Even so, be aware that Northern Trust is showing 1 warning sign in our investment analysis , you should know about...

This article by Simply Wall St is general in nature. 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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