Earnings Beat: Northern Trust Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
Northern Trust Corporation (NASDAQ:NTRS) just released its latest quarterly results and things are looking bullish. Results were good overall, with revenues beating analyst predictions by 3.4% to hit US$1.6b. Statutory earnings per share (EPS) came in at US$1.55, some 7.2% above whatthe analysts had expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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.
See our latest analysis for Northern Trust
After the latest results, the consensus from Northern Trust's 13 analysts is for revenues of US$5.90b in 2020, which would reflect a measurable 3.9% decline in sales compared to the last year of performance. Statutory earnings per share are forecast to crater 20% to US$5.38 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$5.79b and earnings per share (EPS) of US$5.27 in 2020. So the consensus seems to have become somewhat more optimistic on Northern Trust's earnings potential following these results.
The consensus price target was unchanged at US$81.14, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Northern Trust at US$95.00 per share, while the most bearish prices it at US$65.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with the forecast 3.9% revenue decline a notable change from historical growth of 6.8% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.7% annually for the foreseeable future. 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 biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Northern Trust's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Northern Trust's revenues are expected to 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. 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..
We don't want to rain on the parade too much, but we did also find 1 warning sign for Northern Trust that you need to be mindful of.
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