When Northern Trust Corporation (NASDAQ:NTRS) announced its most recent earnings (31 December 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Northern Trust has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see NTRS has performed. See our latest analysis for Northern Trust
Did NTRS’s recent earnings growth beat the long-term trend and the industry?
To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method enables me to assess different stocks on a similar basis, using the latest information. For Northern Trust, its latest earnings (trailing twelve month) is US$1.13B, which, against the previous year’s level, has jumped up by 14.14%. Given that these values may be fairly nearsighted, I have created an annualized five-year figure for Northern Trust’s net income, which stands at US$808.21M This means on average, Northern Trust has been able to increasingly improve its net income over the last few years as well.
How has it been able to do this? Let’s see if it is merely a result of industry tailwinds, or if Northern Trust has experienced some company-specific growth. In the last few years, Northern Trust expanded its bottom line faster than revenue by effectively controlling its costs. This has caused a margin expansion and profitability over time. Scanning growth from a sector-level, the US capital markets industry has been growing its average earnings by double-digit 15.36% over the previous year, and 10.85% over the last five years. This means that any uplift the industry is enjoying, Northern Trust has not been able to leverage it as much as its average peer.
What does this mean?
Northern Trust’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Northern Trust to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for NTRS’s future growth? Take a look at our free research report of analyst consensus for NTRS’s outlook.
- Financial Health: Is NTRS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass 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.