State Street Corp (STT.PG) stock analysis

P/E above its 5-year median

State Street's P/E of 13.5 is above its own 5-year median of 12.6.

P/E above the industry

State Street's P/E of 13.5 is above the Commercial Banks median of 12.0.

P/S below the industry

State Street's price-to-sales of 2.93 is below the Commercial Banks median of 3.57.

P/B above the industry

State Street's price-to-book of 1.58 is above the Commercial Banks median of 1.27.

Trading above fair value

The share price of $165.56 is above our fair value estimate of $136.85.

Margin of safety under 20%

The price is 21.0% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 4.7% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 9.3% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 23.6% over the last twelve months, against a 5-year average of 4.0% a year.

Growing faster than the industry

Revenue grew 13.3% over the last twelve months; the Commercial Banks median is 11.2%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin trend

Banks and insurers do not report gross profit.

Return on equity under 15%

Return on equity was 13.1% over the last twelve months and averaged 10.1% over five years; we look for 15% on both.

Return on assets under 1%

Return on assets was 1.0%; for a bank or insurer, 1% or more is considered good.

Return on equity above the industry

State Street's return on equity of 13.1% is above the Commercial Banks median of 11.5%.

Earnings grew over 5 years

Net income grew 4.0% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 23.8% over the last twelve months, against a 5-year average of 20.7%.

Net margin below the industry

State Street's net margin of 23.8% is below the Commercial Banks median of 30.2%.

Thin capital

Equity is 7.1% of total assets; 8% or more is a comfortable cushion.

Loans funded by deposits

Loans equal 15.8% of deposits, so lending is funded by customer deposits.

Thin loan-loss reserve

The allowance for credit losses is 0.3% of loans; we look for at least 1%.

High cost base

Non-interest expense takes 69.8% of revenue; under 60% is efficient for a bank.

Deposits growing

Deposits grew 11.3% over the past year.

Borrowings

Needs debt and equity figures.

Pays a dividend

State Street paid dividends worth 2.1% of the share price over the last twelve months.

Yield below Treasuries

The 2.1% yield is below the 4.3% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 4.0% or more; State Street yields 2.1%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 31.7% of net income.

Cash-flow cover

Needs dividends paid and free cash flow.