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State Street (STT)
NYSE:STT
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State Street
(NYSE:STT)70Outperform
Positive Factors
Acquisition
STT has entered into an agreement to acquire Mizuho's global custody and related businesses outside of Japan, supporting the overseas investments of Mizuho’s Japanese clients.
Financial Performance
State Street reported 3Q24 EPS of $2.26, exceeding estimates due to higher net interest income and fees.
Negative Factors
Leadership Transition
The CFO, Eric Aboaf, will be transitioning out of the role in February 2025, and no successor has been named yet.
State Street (STT) vs. S&P 500 (SPY)
Market Cap
$26.45B
Dividend Yield3.16%
Average Volume (3M)1.95M
Price to Earnings (P/E)11.2
Beta (1Y)0.86
Revenue Growth20.53%
EPS Growth49.80%
CountryUS
Employees53,000
SectorFinancial
Sector Strength93
IndustryAsset Management Services
Share Statistics
EPS (TTM)8.23
Shares Outstanding288,469,100
10 Day Avg. Volume2,177,466
30 Day Avg. Volume1,953,271
Financial Highlights & Ratios
PEG Ratio0.22
Price to Book (P/B)N/A
Price to Sales (P/S)2.17
Price to Cash Flow (P/CF)-0.90
P/FCF Ratio0.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$114.46Price Target Upside23.69% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering14
State Street Business Overview & Revenue Model
Company DescriptionState Street Corporation is a financial services and bank holding company. It provides a range of financial products and services to institutional investors worldwide including deposits, loans and lease financing, securities finance, trading services, portfolio modeling and construction, and wealth management solutions.
How the Company Makes MoneyState Street makes money primarily through three key revenue streams: investment servicing, investment management, and investment research and trading. The investment servicing segment generates revenue by offering custody, accounting, administration, and securities lending services to institutional investors. This segment is the company's largest revenue contributor. The investment management division, operating under the brand State Street Global Advisors, earns fees by managing assets on behalf of clients, including mutual funds, ETFs, and institutional portfolios. The investment research and trading segment generates income by providing trading, research, and securities lending services. Additionally, State Street's partnerships with other financial institutions and the expansion of its data and analytics offerings contribute to its revenue growth. Factors such as changes in interest rates, market volatility, and regulatory requirements can significantly impact the company's earnings.
State Street Financial Statement Overview
Summary
State Street shows strong revenue growth and a solid gross margin, yet profitability metrics require attention due to recent declines. The balance sheet reflects a leveraged position, and cash flow challenges could impact financial flexibility. Improvements in cash flow generation and profitability margins would enhance the company's financial standing.Income Statement
State Street has demonstrated solid revenue growth with a 8.83% increase in the most recent year. However, the absence of EBIT and EBITDA margins in the latest year is a concern for profitability analysis. The gross profit margin remains strong at approximately 96.64%, but the net profit margin has declined slightly, indicating potential pressure on net income levels.70
Positive
Balance Sheet
The company exhibits a relatively high debt-to-equity ratio of 1.31, suggesting a leveraged position. However, the equity ratio of 7.17% shows a reasonable level of equity compared to total assets. Return on Equity (ROE) stands at 10.61%, reflecting moderate profitability relative to shareholders' equity.65
Positive
Cash Flow
State Street's cash flow presents challenges, with a decrease in free cash flow from the previous year to $622 million. The operating cash flow to net income ratio is low at 0.23, indicating that net income is not fully backed by operating cash flow. However, the free cash flow to net income ratio is better at 0.23, showing some alignment between cash generation and profitability.50
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 13.00B | 11.95B | 12.15B | 12.03B | 11.70B | Gross Profit |
| 12.56B | 11.52B | 11.75B | 11.58B | 11.21B | EBIT |
| -13.05B | 2.74B | 4.76B | 3.17B | 2.90B | EBITDA |
| 0.00 | 3.38B | 4.41B | 4.28B | 3.99B | Net Income Common Stockholders |
| 2.69B | 1.94B | 2.77B | 2.69B | 2.42B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 62.04B | 48.57B | 101.60B | 183.39B | 179.47B | Total Assets |
| 353.24B | 297.26B | 301.45B | 314.62B | 314.71B | Total Debt |
| 33.11B | 21.50B | 17.09B | 13.60B | 17.79B | Net Debt |
| 29.97B | -70.27B | -88.47B | -96.39B | -102.64B | Total Liabilities |
| 327.91B | 273.46B | 276.26B | 287.26B | 288.51B | Stockholders Equity |
| 25.33B | 23.80B | 25.19B | 27.36B | 26.20B |
| Cash Flow | Free Cash Flow | |||
| 622.00M | -126.00M | 11.22B | -7.52B | 2.97B | Operating Cash Flow |
| 622.00M | 690.00M | 11.95B | -6.71B | 3.53B | Investing Cash Flow |
| -1.32B | 12.74B | 6.82B | -2.17B | -65.53B | Financing Cash Flow |
| 696.00M | -13.35B | -18.43B | 9.05B | 62.17B |
State Street Technical Analysis
Negative
92.54
Price Trends
98.13
Negative
96.23
Negative
87.49
Positive
Market Momentum
-1.05
Positive
33.79
Neutral
11.87
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STT, the sentiment is Negative. The current price of 92.54 is below the 20-day moving average (MA) of 98.05, below the 50-day MA of 98.13, and above the 200-day MA of 87.49, indicating a neutral trend. The MACD of -1.05 indicates Positive momentum. The RSI at 33.79 is Neutral, neither overbought nor oversold. The STOCH value of 11.87 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STT.
State Street Risk Analysis
State Street disclosed 38 risk factors in its most recent earnings report. State Street reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
State Street Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $61.27B | 14.76 | 10.96% | 2.14% | 17.56% | 46.36% | |
75 Outperform | $150.05B | 23.01 | 14.60% | 2.11% | 12.15% | 15.17% | |
73 Outperform | $140.11B | 25.13 | 12.28% | 1.36% | 1.87% | 17.63% | |
71 Outperform | $20.42B | 10.68 | 15.88% | 2.74% | 29.42% | 92.95% | |
70 Outperform | $26.45B | 11.16 | 10.61% | 3.16% | 20.53% | 49.80% | |
70 Outperform | $22.29B | 10.93 | 19.76% | 4.77% | 9.80% | 17.87% | |
64 Neutral | $14.34B | 10.61 | 9.28% | 4.07% | 18.04% | -9.54% |
* Financial Sector Average
Performance Comparison
STT
State Street
92.54
23.16
33.38%
BK
Bank of New York Mellon Corporation
86.56
32.24
59.35%
BLK
BlackRock
968.14
152.07
18.63%
TROW
T Rowe Price
100.65
-11.37
-10.15%
SCHW
Charles Schwab
76.74
9.59
14.28%
NTRS
Northern
105.37
26.78
34.08%
State Street Earnings Call Summary
Earnings Call Date: Jan 17, 2025 | % Change Since: -7.91% | Next Earnings Date: Apr 11, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial year for State Street with significant revenue growth, record-breaking wins, and successful capital returns. Despite some challenges with pricing headwinds and rising operational costs, the company demonstrated effective strategic execution and robust operational improvements.Highlights
Strong Revenue and Earnings Growth
Full year fee and total revenue increased 7% and 9% respectively, with EPS growth up 13% year-over-year. Pretax margin expanded by more than 100 basis points.
Record AUC/A Wins
State Street achieved over $2.3 trillion in AUC/A wins for 2024, including $1.1 trillion in Q4.
Investment Management Success
Generated $146 billion of net new assets in 2024 with a 3% organic AUM growth, above the 2% target. Record ETF inflows and new product launches contribute to growth.
Operational Improvements
Achieved approximately $500 million in productivity savings in 2024 through operational simplification and technology modernization.
Strong Balance Sheet and Capital Return
Returned $2.2 billion of capital to shareholders in 2024, including common share repurchases and a 10% increase in the quarterly dividend.
Lowlights
Pricing Headwinds
Servicing fee growth was partially offset by pricing headwinds and lower client activity.
Expense Growth
Total expenses increased by 8% year-on-year, driven by performance-based incentive compensation and employee benefits.
Rising Operational Costs
Underlying expenses increased by 4% year-over-year, affecting operating leverage.
Company Guidance
During the State Street Corporation's Q4 2024 earnings call, the executives provided a robust outlook for 2025, emphasizing several key metrics and strategic priorities. The company reported a full-year fee and total revenue growth of 7% and 9% respectively, with an EPS of $8.21, up from $5.58 in 2023, indicating a 13% year-over-year increase excluding notable items. The pretax margin expanded by over 100 basis points, while the return on average tangible common equity reached 19%. The company celebrated significant wins with assets under custody/administration (AUC/A) totaling over $2.3 trillion, including $1.1 trillion in Q4 alone. Investment Management also saw record management fees and ETF inflows, with $146 billion of net new assets for the year. Looking ahead, fee revenue is expected to increase by 3-5%, with a focus on maintaining a 2-3% expense growth rate and achieving positive operating leverage. The company targets a capital payout ratio of about 80% for 2025, subject to market conditions. Additionally, productivity savings of approximately $500 million were realized, supporting ongoing investments in strategic growth areas like Alpha, private markets, and asset management distribution.State Street Corporate Events
Business Operations and StrategyFinancial Disclosures
State Street to Redeem $500M Senior Notes Early
Neutral
Feb 26, 2025
On February 26, 2025, State Street Corporation announced its plan to redeem its $500 million 2.901% Fixed-to-Floating Rate Senior Notes due 2026 on March 30, 2025. The redemption will be at the principal amount plus accrued interest, with payment scheduled for the next business day. This move indicates State Street’s strategic financial management, utilizing cash on hand to fund the redemption, which may impact its liquidity and financial positioning.
Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
State Street Announces Leadership Changes and Strong Q4 Results
Positive
Jan 17, 2025
In a recent announcement, State Street Corporation detailed changes in its executive leadership and financial performance for 2024. Eric Aboaf, the Vice Chairman and CFO, will step down in February 2025, with Mark R. Keating appointed as interim CFO. The company reported strong financial results for the fourth quarter of 2024, with a 12% increase in total revenue and a 13% rise in fee revenue year-over-year, driven by strategic initiatives in Investment Services and Global Advisors. This performance indicates robust business momentum and positions the company well for sustainable growth in 2025.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.