Shares of Northern Trust (NASDAQ:NTRS) declined about 9% on Thursday after the company reported dismal fourth-quarter results. The quarterly performance was impacted by lower client assets (down 22% year-over-year) and a one-time charge of $266 million related to the “repositioning” of the company’s securities portfolio.
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The bank reported earnings per share of $0.71, which compared unfavorably with $1.91 in the prior-year quarter. Also, the reported figure was much below Wall Street’s earnings estimate of $1.81.
Further, revenue declined about 8% to $1.53 billion and lagged analysts’ expectations of $1.75 billion. The fall can be attributed to a 6% decline in Trust, Investment, and Other Servicing fees. This was partially offset by a 48% rise in net interest income (NII).
In Q4 2022, Northern Trust increased provisions by $5 million to $200.9 million. The upside was due to expectations of a weak macroeconomic environment in the near term.
Is Northern Trust a Good Stock?
The company has consistently paid dividends for the past 23 years, which reflects well on its financial position. Meanwhile, volatile markets are likely to keep revenues under pressure.
Overall, Wall Street is sidelined on NTRS stock, with a Hold consensus rating based on three Buys, five Holds, and one Sell. The average price target of $98.11 implies 8.5% upside potential. Shares have plunged 22.4% over the past year.
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