Shareholders might have noticed that Northern Trust Corporation (NASDAQ:NTRS) filed its quarterly result this time last week. The early response was not positive, with shares down 3.4% to US$84.41 in the past week. Revenues of US$1.5b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$1.32, missing estimates by 3.9%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following last week's earnings report, Northern Trust's 13 analysts are forecasting 2021 revenues to be US$6.07b, approximately in line with the last 12 months. Statutory per share are forecast to be US$5.98, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$6.06b and earnings per share (EPS) of US$5.95 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$88.47, suggesting that the company has met expectations in its recent result. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Northern Trust analyst has a price target of US$96.00 per share, while the most pessimistic values it at US$77.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
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 Northern Trust's revenue growth is expected to slow, with forecast 1.1% increase next year well below the historical 6.0%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.0% next year. Factoring in the forecast slowdown in growth, it seems obvious that Northern Trust is also expected to grow slower than other industry participants.
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. 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. The consensus price target held steady at US$88.47, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Northern Trust analysts - going out to 2022, and you can see them free on our platform here.
It might also be worth considering whether Northern Trust's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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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