Where Is State Street Stock Headed?

STT: State Street logo
State Street

State Street’s stock (NYSE: STT) has gained 12% YTD, as compared to the 4% rise in the S&P500 over the same period. Further, the stock is currently trading at $87 per share, which is 10% below its fair value of $96 – Trefis’ estimate for State Street’s valuationThe custody banking giant topped the consensus estimates in the fourth quarter of 2022. Its total revenues increased to $3.15 billion – 3% above the year-ago level. It was primarily due to a 63% jump in the net interest income (NII), partially offset by a 6% drop in the total fee income. The NII benefited from improvements in the interest rates and higher interest-earnings assets. That said, the fee income mainly suffered due to lower market valuations and the negative impact of currency translation. Notably, the Assets under Custody & Administration (AuC/A) and Assets under Management (AuM) were $36.7 trillion (down 16% y-o-y) and $3.5 trillion (down 16%) respectively at quarter-end. Overall, the net income increased 5% y-o-y to $733 million.

The bank’s top line grew 1% y-o-y to $12.15 billion in FY 2022. While the NII increased 34% y-o-y, it was almost offset by a 4% decline in the total fee income. The fee revenues were down due to an 8% drop in the servicing fees and a 6% decrease in the management fees, which contribute more than 70% of the total fee income. Altogether, the adjusted net income increased by 3% y-o-y to $2.66 billion.

Moving forward, we expect the net interest income to continue its growth trajectory in the subsequent quarters. All in all, State Street’s revenues are estimated to remain around $12.64 billion in FY2023. Additionally, STT’s adjusted net income margin is likely to see a slight improvement in the year, leading to an adjusted net income of $2.85 billion and an annual GAAP EPS of $8.02. This coupled with a P/E multiple of 12x will lead to a valuation of $96.

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 Returns Mar 2023
MTD [1]
YTD [1]
Total [2]
 STT Return -2% 12% 12%
 S&P 500 Return 0% 4% 78%
 Trefis Multi-Strategy Portfolio 2% 9% 245%
Relevant Articles
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  2. State Street Stock Increased 9% In One Week, What’s Next?
  3. State Street Stock To Edge Past The Consensus In Q3?
  4. What To Expect From State Street Stock?
  5. State Street Stock To Top The Consensus In Q2?
  6. Is State Street Stock Attractive At The Current Levels?

[1] Month-to-date and year-to-date as of 3/8/2023
[2] Cumulative total returns since the end of 2016

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