State Street Stock Outperformed The Consensus In Q2, What's Next?

Core Insights - State Street's stock (NYSE: STT) has gained 10% year-to-date (YTD), underperforming the S&P 500's 17% rise during the same period [1] - The stock is currently trading at $85 per share, which is 2% below its fair value of$ 87 as estimated by Trefis [1] Financial Performance - STT stock has increased 15% from $75 in early January 2021 to around$ 85 now, while the S&P 500 has risen about 50% during the same period [2] - The stock's returns were inconsistent: 28% in 2021, -17% in 2022, and 0% in 2023, indicating underperformance compared to the S&P 500 [2] - In Q2 2024, State Street reported total revenues of $3.19 billion, up 3% year-over-year (y-o-y), driven by a 2% rise in noninterest revenues and a 6% gain in net interest income [2] - Assets under Custody & Administration (AuC/A) reached$ 44.31 trillion, up 12% y-o-y, and Assets under Management (AuM) were $4.4 trillion, up 16% y-o-y [2] - For FY 2023, total revenues decreased 2% y-o-y to$ 11.94 billion, primarily due to a marginal decrease in fee revenue [3] - Adjusted net income for FY 2023 decreased 32% y-o-y to $1.8 billion, attributed to a higher effective tax rate [3] Future Outlook - Revenues are forecasted to remain around$ 12.55 billion in FY 2024, with an expected adjusted net income margin decline leading to an annual GAAP EPS of $5.71 [3] - The stock's valuation is projected at$ 87 based on a P/E multiple of just above 15x [3]