On Jun 29, shares of Northern Trust Corporation NTRS hit a new 52-week high of $98.72. The stock closed the trading session at $97.00, marginally higher than the previous day’s closing price.
What Led It to the New High?
The major reason behind investors’ optimism is the approval of the company’s 2017 Capital Plan by the Federal Reserve, after having successfully passed the Stress Test.
Per Northern Trust’s capital plan, the common stock dividend is to be raised nearly 11% to 42 cents per share from third-quarter 2017. A share repurchase program of up to $750 million between Jul 2017 and Jun 2018 was also authorized.
Looking at the company’s consistently improving performance and favorable debt/equity ratio compared to the broader industry, such capital deployment activities are expected to be sustainable.
Is There More Steam Left?
Organic growth has been a key strength for Northern Trust. Its revenues have witnessed a compound annual growth rate of 6.2% over the last five years (ended 2016), with the trend continuing in first-quarter 2017. Also, with the rising loan demand and improving economy, the momentum is expected to persist.
Pressure on Northern Trust’s margins seems to be easing with the rising rate environment. Also, pursuant to the latest Fed rate hike, the company raised its prime lending rate to 4.25%.
Further, the Zacks Consensus Estimate for Northern Trust’s 2017 earnings has been revised slightly upward over the last 30 days.
The stock has gained 8.9% over the last six months, outperforming the Zacks categorized Banks - Major Regional industry’s rally of 5.8%.
Currently, Northern Trust carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same space include M&T Bank Corporation’s MTB, Comerica Incorporated CMA and People's Utah Bancorp’s PUB. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
M&T Bank witnessed a 1.1% upward revision in the Zacks Consensus Estimate for the current year, over the last 60 days. Also, its shares have gained 40.5% over the last one year.
Comerica’s current-year earnings estimates were revised slightly upward, over the last 60 days. Over the last one year, its shares have surged 81.6%.
People's Utah Bancorp’s current-year earnings estimates were revised slightly upward, over the last 60 days. Over the last one year, its shares have surged 65.7%.
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