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State Street's Third Quarter Earnings Report
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STT
State Street (NYSE:STT) announced its results for the most recent quarter on October 16, 2012. State Street provides a range of investment management strategies, investment management advisory services and other financial services.
Earnings play an important role in measuring the appropriate valuation for a stock. Investors should be cautious if the company's stock price is high but it consistently has low earnings. SEE: 5 Tricks Companies Use During Earnings Season
The Numbers: State Street's EPS fell in line with analyst expectations of 99 cents per share while revenue of $2.36 billion missed estimates of $2.42 billion. Revenue fell 9.5% from the same period last year. Revenue declined last quarter after shrinking 5.6% to $2.53 billion in the second quarter. Net income for the third quarter was $654 million. This is 17.8% higher than the year-ago quarter. Last quarter's profit boost ends a two-quarter streak of year-over-year profit decreases.
Management Quote: Joseph L. Hooley, State Street's chairman, president and chief executive officer, said, "Our third-quarter results reflect continued resilience across both asset servicing and asset management, partially offset by weakness in trading services. In a difficult environment, we were able to achieve positive operating leverage by controlling expenses and by continuing to implement our Business Operations and Information Technology Transformation program."
A Look Back: Net income has increased 72.9% year-over-year on average across the last five quarters. The biggest gain came in the fourth quarter of the last fiscal year, when income climbed more than fourfold from the year-earlier quarter.
Looking Ahead: The outlook for the company's results in the upcoming quarter is unfavorable. The average estimate for the fourth quarter is $1 per share, down from $1.02 90 days ago. Decreasing earnings estimates is generally a negative sign as it suggests analyst believe future earnings to be weaker than previously anticipated. The average estimate for the fiscal year is $3.88 per share, down from $3.94 90 days ago.
Earnings play an important role in measuring the appropriate valuation for a stock. Investors should be cautious if the company's stock price is high but it consistently has low earnings. SEE: 5 Tricks Companies Use During Earnings Season
The Numbers: State Street's EPS fell in line with analyst expectations of 99 cents per share while revenue of $2.36 billion missed estimates of $2.42 billion. Revenue fell 9.5% from the same period last year. Revenue declined last quarter after shrinking 5.6% to $2.53 billion in the second quarter. Net income for the third quarter was $654 million. This is 17.8% higher than the year-ago quarter. Last quarter's profit boost ends a two-quarter streak of year-over-year profit decreases.
Management Quote: Joseph L. Hooley, State Street's chairman, president and chief executive officer, said, "Our third-quarter results reflect continued resilience across both asset servicing and asset management, partially offset by weakness in trading services. In a difficult environment, we were able to achieve positive operating leverage by controlling expenses and by continuing to implement our Business Operations and Information Technology Transformation program."
A Look Back: Net income has increased 72.9% year-over-year on average across the last five quarters. The biggest gain came in the fourth quarter of the last fiscal year, when income climbed more than fourfold from the year-earlier quarter.
Looking Ahead: The outlook for the company's results in the upcoming quarter is unfavorable. The average estimate for the fourth quarter is $1 per share, down from $1.02 90 days ago. Decreasing earnings estimates is generally a negative sign as it suggests analyst believe future earnings to be weaker than previously anticipated. The average estimate for the fiscal year is $3.88 per share, down from $3.94 90 days ago.
by
Investopedia Staff
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