State Street's Revenue Growth Continues: Should You Own It?
On Sep 10, 2014, we issued an updated research report on State Street Corporation (STT - Analyst Report). This Boston, MA-based major regional bank remains focused on improving its top line. Nevertheless, rising operating expenses CONTINUE to weigh on the bank’s financials.
State Street reported second-quarter 2014 operating earnings of $1.39 per share on Jul 22, beating the Zacks Consensus Estimate by 10.3%. Also, the bottom line compared favorably with $1.24 earned in the prior-year quarter.
Results were aided by a higher fee income, which was partly offset by rising expenses and lower net interest income. Revenues, on an operating basis, came in at $2.68 billion, up 4% from the prior-year quarter. On an operating basis, non-interest expenses climbed 4% from the year-ago quarter to reach $1.82 billion.
The company, with its consistent dividend payments and regular share buyback PROGRAMS, is a sound asset for yield-seeking investors. However, we expect sluggish growth in net interest income to pressurize the net interest margin (NIM) going forward.
Over the past 30 days, the Zacks Consensus Estimate for 2014 and 2015 has remained unchanged at $4.86 and $5.39, respectively.
State Street currently carries a Zacks Rank #3 (Hold).
Some better-ranked banks include Wells Fargo & Co. (WFC - Analyst Report), JPMorgan Chase & Co. (JPM - Analyst Report) and Bank of the Ozarks, Inc. (OZRK -Snapshot Report). All these stocks hold a Zacks Rank #2 (Buy).
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