Monday, April 18, 2011

State Street Corp. (NYSE: STT): Q1 Earnings Preview 2011

State Street Corp. (NYSE: STT), the third-largest custody bank, is scheduled to release its first-quarter earnings before the opening bell on Tuesday, April 19, 2011. Analysts, on average, expect the company to report earnings of 86 cents per share on revenue of $2.29 billion. In the year ago quarter, the company reported earnings of 75 cents per share on revenue of $2.12 billion.

State Street Corporation, through its subsidiaries, provides various products and services for the institutional investors worldwide. The Company, through its subsidiaries, including its banking subsidiary, State Street Bank and Trust Company, provides products and services for institutional investors worldwide. 

In the preceding fourth quarter, the Boston, Massachusetts-based company's net income was $81 million or $0.16 per share, down from $498 million or $1 per share in the previous-year quarter.  On an operating basis, net income for the quarter was $435 million or $0.87 per share, up from $353 million or $0.71 per share in the year-ago period. Revenue dropped 10.4% to $2.04 billion from $2.28 billion. Analysts, on average, expected the company to report earnings of 85 cents per share on revenue of $2.14 billion. 

Last year, the company instituted a multi-year restructuring action. The restructuring program also includes enhancements to business operations and information technology systems.  The program is expected to transform our business operating model and is projected to result in an average annual run rate savings of between $575 million and $625 million by the end of 2014.

State Street'ss stated goal is to double its non-U.S. revenues over the five-year period ending in 2014. The company also plans to invest in technologies such as private processing clouds and will develop new methods and tools to accelerate the pace of innovation and the introduction of new services and solutions.

During the quarter in review, State Street Corp. declared an increased quarterly dividend of $0.18 per common share to be paid on April 15 to stockholders of record as of April 1. The dividend represents an increase of $0.17 per share from the $0.01 per share dividend paid on January 18. State Street's Board of Directors also approved a new common stock purchase program authorizing the purchase of up to $675 million of common stock in 2011. The Federal Reserve reviewed State Street's comprehensive capital plan and did not object to the Company's increase in its quarterly dividend and the execution of its new stock purchase program.

The company's stock currently trades at a forward P/E (fye Dec 31, 2012) of 10.55 and PEG ratio (5 yr expected) of 1. In terms of stock performance, State Street shares have lost nearly 5% over the past year.

Full Disclosure: None.
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