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What's in Store for Northern Trust (NTRS) in Q1 Earnings?

Northern Trust Corporation’s NTRS first-quarter 2021 results, scheduled on Apr 20, will likely reflect year-over-year decline in revenues and earnings.

Northern Trust uses a lag effect to calculate its corporate custody and investment management fees, i.e. the computations are based on the prior-quarter end valuations. Since the performance of equity markets was impressive during the fourth quarter of 2020, the company is likely to have registered increases in custody, servicing and management fees during first-quarter 2021.

The company provides majority of its asset-management services through the Corporate and Institutional Services (C&IS) segment, which generates more than 50% of the total revenues. An increase in revenues in this segment is anticipated to have offered some support to Northern Trust’s overall top line during the to-be-reported quarter.

The Zacks Consensus Estimate of $429 million for the C&IS segment’s custody and fund administration fees suggests 8.6% growth from the year-ago reported number. Also, the consensus estimate for segment’s investment management revenues of $123 million indicates a rise of 1.7%.

However, the consensus estimate for securities lending revenues of $21.5 million implies 7.1% year-over-year fall. So, given the solid performance of its components, the Zacks Consensus Estimate for total C&IS trust, investment and other servicing fees of $608 million suggests 5.7% growth.

Other Major Factors to Influence Q1 Results

Net Interest Income (NII): The overall lending scenario was muted during the first quarter, with commercial real estate and consumer loan portfolios having offered some respite. With interest rates at near-zero levels, Northern Trust’s net interest margin and NII are likely to have been adversely impacted, while low deposit costs and steepening of the yield curve might have offered some support.

The Zacks Consensus Estimate of $135.8 million for average interest earning assets indicates a 22.8% year-over-year improvement. However, the consensus mark of $325 million for NII suggests decline of 20.3%.

Foreign-Exchange Trading Revenues: During the first quarter, foreign exchange (FX) trading volatility was down, while FX trading volumes were up. The consensus estimate of $66 million for FX trading revenues indicates a year-over-year decrease.

Expenses: Northern Trust’s expenses in the quarter under review are anticipated to have been under control aided by its continued cost-saving initiatives.

Earnings Whispers

Northern Trust doesn’t have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Northern Trust is -0.13%.

Zacks Rank: Northern Trust currently carries a Zacks Rank of 3..

Northern Trust Corporation Price and EPS Surprise

Northern Trust Corporation price-eps-surprise | Northern Trust Corporation Quote

The Zacks Consensus Estimate for earnings has been revised marginally upward in the past 30 days. Nonetheless, the figure indicates a decline of 2.6% from the year-ago quarter’s reported figure. Also, the consensus estimate for sales is pegged at $1.53 billion, implying a 3.6% fall.

 

Finance Stocks Worth a Look

Here are a few finance stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:

BankUnited BKU is scheduled to release earnings on Apr 22. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +0.64%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Earnings ESP for Invesco IVZ is +1.13% and it sports a Zacks Rank #1 at present. The company is slated to report quarterly numbers on Apr 27.

Capital One Financial COF is slated to report quarterly results on Apr 27. The company currently has an Earnings ESP of +1.47% and a Zacks Rank of 3.

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