DJ State Street Stock Is Surging After Beating Estimates. Here's Why. -- Barrons.com
By John Coumarianos
State Street stock is surging this morning after beating Wall Street estimates.
Shares of State Street (ticker: STT) are up more than 4% Friday morning. The stock is up 19% from Jan. 17, 2019 through yesterday's close, compared with the S&P 500's 29% rise, including dividends, over the same period.
The firm reported earnings-per-share for the fourth quarter of 2019 of $1.73 on Friday. Fee revenue increased for the quarter to $2.37 billion from $2.33 billion for the same quarter in 2018 for a 1.8% increase. Expenses declined for the quarter by 8.8% to $2.27 billion from $2.49 billion for the same quarter in 2018.
Quarterly profit and revenue exceeded analysts' average estimates, according to FactSet.
For the year, the firm's total revenue was $9.2 billion, a decline from $9.5 billion in 2018. Diluted earnings per share also declined in 2019 to $5.75 from $6.39 in 2018. However, in the three years prior to 2018, diluted earnings per share were $5.19, $4.96, and $4.45.
State Street and Bank of New York Mellon are rivals in the asset custody business, and both have been trying to modernize their systems.
State Street is also the third largest provider of exchange-traded funds (ETFs), a fast-growing business benefiting from investor migration from traditional actively managed mutual funds to index funds. ETFs are more tax-efficient than mutual funds, and trade throughout the day instead of once at market close like traditional mutual funds.
State Street reported net inflows of $103 billion in 2019, bringing its assets under management (AUM) to $3.1 trillion in the quarter. Its rival in the ETF business, BlackRock, recently reported that it crossed the $7 trillion mark in AUM.
Fund-research firm Morningstar reports "net flow" data, taking into consideration inflows and outflows. It reported State Street's net flows at around $19 billion in 2019 versus more than $100 billion for Vanguard and BlackRock.
"We are pleased with these results and our improving performance which reflect hard work and better execution across the organization," said CEO Ron O'Hanley in a statement.
Write to John Coumarianos at john.coumarianos@barrons.com
(END) Dow Jones Newswires
January 17, 2020 10:49 ET (15:49 GMT)
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