WEBULL
WebtradeDownload

Northern Trust (NTRS) Stock May Be 14% Undervalued Following A $3.5B Buyback

Simply Wall St · 1d ago

Northern Trust has ridden a strong share price run in recent years, and the question now is whether the returns it earns on its capital are enough to back up where the stock trades today.

  • Over the past 3 years the stock has delivered a 164.2% return, which puts real pressure on the idea that Northern Trust's capital returns can comfortably support the current valuation.
  • The freshly approved US$3.5b share repurchase plan and ongoing dividend program can reshape how much capital the company keeps versus returns to shareholders, which matters for how efficiently each retained dollar is reinvested.
  • If you'd rather focus on earnings, this one's for you. See why Northern Trust's 13.1x P/E tells a different valuation story.

The issue now is whether Northern Trust earns high enough returns on its capital for the current share price to make sense.

If you want more ideas built around capital efficiency rather than just price moves, a focused screener of 34 high quality undervalued stocks can be a useful next step in your research.

Is Northern Trust Still Cheap on Excess Returns?

The Excess Returns model looks at how much value Northern Trust can create above its cost of equity on each dollar of shareholder capital. For this bank, the inputs show a book value of $68.89 per share and a stable book value estimate of $73.97 per share, with a stable EPS assumption of $13.86 per share. That earnings profile is built on an average return on equity of 18.74%, compared with a cost of equity of $6.86 per share, which drives an excess return of $7.00 per share in the model.

Those excess returns, carried forward on the stable book value base, lead the Excess Returns framework to place Northern Trust's estimated intrinsic value modestly above the current share price of $170.66. Because the newly approved US$3.5b buyback and ongoing dividends should influence how much equity stays in the business, the gap suggested by the model will matter most if the company can keep earning close to that assumed return on equity over time. The recently announced expansion into digital asset services, including tokenization and stablecoin work, helps explain why the market may be willing to pay a premium multiple to those modeled excess returns. Find out what Northern Trust could be worth using our Excess Returns estimate.

The Northern Trust Narrative: What Would Justify Today's Price?

Northern Trust's valuation question now feeds directly into Simply Wall St Narratives. These lay out in plain terms what would need to happen to future growth, profitability and earnings for the share price to sit meaningfully above or below where it trades today on the Community page. Rather than a single headline multiple or one model output, each narrative spells out its own fair value assumptions so you can compare those expectations with the actual results as they are reported.

One of the top community narratives on Northern Trust: 7% undervalued

"Technology and AI programs, including AI assisted code development and a plan for tech spend growth to moderate toward mid single digit rates..."

Discover why this Narrative puts Northern Trust at 7% undervalued.

Northern Trust’s price is only one piece of the decision

Before you weigh up everything you have just seen on returns and valuation, it is worth asking who is steering Northern Trust, how their incentives are set, and what that might mean for future choices. See who runs Northern Trust and how they are paid.