State Street (NYSE: STT) and Northern Trust (NASDAQ:NTRS) are both large-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitability and analyst recommendations.
This is a breakdown of current ratings for State Street and Northern Trust, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Valuation and Earnings
This table compares State Street and Northern Trust’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|State Street||$10.64 billion||3.41||$2.14 billion||$5.77||16.93|
|Northern Trust||$5.14 billion||4.32||$1.03 billion||$4.53||21.57|
State Street has higher revenue and earnings than Northern Trust. State Street is trading at a lower price-to-earnings ratio than Northern Trust, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
88.1% of State Street shares are owned by institutional investors. Comparatively, 81.8% of Northern Trust shares are owned by institutional investors. 0.7% of State Street shares are owned by insiders. Comparatively, 1.3% of Northern Trust shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
State Street pays an annual dividend of $1.68 per share and has a dividend yield of 1.7%. Northern Trust pays an annual dividend of $1.68 per share and has a dividend yield of 1.7%. State Street pays out 29.1% of its earnings in the form of a dividend. Northern Trust pays out 37.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Northern Trust has raised its dividend for 6 consecutive years. State Street is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares State Street and Northern Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility and Risk
State Street has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500. Comparatively, Northern Trust has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500.
State Street beats Northern Trust on 11 of the 16 factors compared between the two stocks.
State Street Company Profile
State Street Corporation is a financial holding company. The Company operates through two lines of business: Investment Servicing and Investment Management. The Company, through its subsidiary, State Street Bank and Trust Company (State Street Bank), provides a range of financial products and services to institutional investors across the world. Investment servicing line of business performs functions, such as providing institutional investors with clearing, settlement and payment services. The Company operates investment management line of business through State Street Global Advisors (SSGA). SSGA provides a range of investment management, investment research and investment advisory services to corporations, public funds and other investors. Its clients include mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments and investment managers.
Northern Trust Company Profile
Northern Trust Corporation is a financial holding company. The Company provides asset servicing, fund administration, asset management, fiduciary and banking solutions for corporations, institutions, families and individuals across the world. Its segments include Corporate & Institutional Services (C&IS), Wealth Management, and Treasury and Other. The C&IS segment is a provider of asset servicing and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds and other institutional investors around the globe. The Wealth Management segment provides trust, investment management, custody and philanthropic services; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services, and private and business banking. It conducts its business through various subsidiaries.
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