Intrinsic value of Northern Trust - NTRS

Previous Close

$97.48

  Intrinsic Value

$184.66

stock screener

  Rating & Target

str. buy

+89%

Previous close

$97.48

 
Intrinsic value

$184.66

 
Up/down potential

+89%

 
Rating

str. buy

Our model is not good at valuating stocks of financial companies, such as NTRS.

We calculate the intrinsic value of NTRS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 22.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  5.90
  15.30
  14.27
  13.34
  12.51
  11.76
  11.08
  10.47
  9.93
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.36
  7.12
  6.91
  6.72
  6.55
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
Revenue, $m
  5,117
  5,900
  6,742
  7,641
  8,597
  9,608
  10,673
  11,791
  12,961
  14,184
  15,459
  16,787
  18,169
  19,606
  21,100
  22,652
  24,265
  25,941
  27,684
  29,496
  31,381
  33,343
  35,386
  37,514
  39,733
  42,046
  44,459
  46,978
  49,608
  52,356
  55,228
Variable operating expenses, $m
 
  4,104
  4,683
  5,300
  5,957
  6,651
  7,383
  8,150
  8,954
  9,794
  10,670
  11,530
  12,480
  13,467
  14,492
  15,559
  16,666
  17,818
  19,015
  20,260
  21,554
  22,902
  24,305
  25,767
  27,291
  28,879
  30,537
  32,267
  34,074
  35,961
  37,933
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  3,600
  4,104
  4,683
  5,300
  5,957
  6,651
  7,383
  8,150
  8,954
  9,794
  10,670
  11,530
  12,480
  13,467
  14,492
  15,559
  16,666
  17,818
  19,015
  20,260
  21,554
  22,902
  24,305
  25,767
  27,291
  28,879
  30,537
  32,267
  34,074
  35,961
  37,933
Operating income, $m
  1,517
  1,796
  2,059
  2,341
  2,640
  2,957
  3,290
  3,640
  4,007
  4,390
  4,789
  5,257
  5,690
  6,140
  6,607
  7,093
  7,598
  8,123
  8,669
  9,236
  9,827
  10,441
  11,081
  11,747
  12,442
  13,166
  13,922
  14,711
  15,534
  16,395
  17,294
EBITDA, $m
  1,890
  1,963
  2,243
  2,543
  2,861
  3,197
  3,551
  3,923
  4,313
  4,720
  5,144
  5,586
  6,046
  6,524
  7,021
  7,537
  8,074
  8,632
  9,212
  9,815
  10,442
  11,095
  11,775
  12,483
  13,221
  13,990
  14,793
  15,631
  16,507
  17,421
  18,377
Interest expense (income), $m
  182
  3,682
  4,196
  4,812
  5,471
  6,172
  6,912
  7,692
  8,511
  9,368
  10,264
  11,198
  12,171
  13,183
  14,236
  15,330
  16,467
  17,649
  18,877
  20,154
  21,481
  22,862
  24,299
  25,796
  27,355
  28,980
  30,675
  32,442
  34,287
  36,214
  38,227
Earnings before tax, $m
  1,517
  -1,887
  -2,136
  -2,471
  -2,831
  -3,215
  -3,622
  -4,052
  -4,504
  -4,979
  -5,475
  -5,941
  -6,482
  -7,044
  -7,629
  -8,237
  -8,869
  -9,526
  -10,208
  -10,917
  -11,654
  -12,421
  -13,219
  -14,049
  -14,913
  -15,814
  -16,753
  -17,732
  -18,753
  -19,819
  -20,933
Tax expense, $m
  484
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  1,033
  -1,887
  -2,136
  -2,471
  -2,831
  -3,215
  -3,622
  -4,052
  -4,504
  -4,979
  -5,475
  -5,941
  -6,482
  -7,044
  -7,629
  -8,237
  -8,869
  -9,526
  -10,208
  -10,917
  -11,654
  -12,421
  -13,219
  -14,049
  -14,913
  -15,814
  -16,753
  -17,732
  -18,753
  -19,819
  -20,933

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  5,332
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  123,927
  137,207
  156,786
  177,706
  199,935
  223,443
  248,205
  274,202
  301,421
  329,856
  359,511
  390,398
  422,537
  455,956
  490,691
  526,788
  564,298
  603,284
  643,811
  685,954
  729,796
  775,425
  822,935
  872,429
  924,015
  977,807
  1,033,928
  1,092,505
  1,153,674
  1,217,576
  1,284,362
Adjusted assets (=assets-cash), $m
  118,595
  137,207
  156,786
  177,706
  199,935
  223,443
  248,205
  274,202
  301,421
  329,856
  359,511
  390,398
  422,537
  455,956
  490,691
  526,788
  564,298
  603,284
  643,811
  685,954
  729,796
  775,425
  822,935
  872,429
  924,015
  977,807
  1,033,928
  1,092,505
  1,153,674
  1,217,576
  1,284,362
Revenue / Adjusted assets
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
Average production assets, $m
  501
  578
  661
  749
  843
  942
  1,046
  1,155
  1,270
  1,390
  1,515
  1,645
  1,781
  1,921
  2,068
  2,220
  2,378
  2,542
  2,713
  2,891
  3,075
  3,268
  3,468
  3,676
  3,894
  4,120
  4,357
  4,604
  4,862
  5,131
  5,412
Working capital, $m
  0
  2,950
  3,371
  3,821
  4,299
  4,804
  5,336
  5,895
  6,481
  7,092
  7,729
  8,394
  9,085
  9,803
  10,550
  11,326
  12,132
  12,971
  13,842
  14,748
  15,691
  16,672
  17,693
  18,757
  19,866
  21,023
  22,229
  23,489
  24,804
  26,178
  27,614
Total debt, $m
  110,545
  119,874
  137,496
  156,324
  176,330
  197,487
  219,773
  243,170
  267,666
  293,258
  319,948
  347,747
  376,671
  406,748
  438,010
  470,497
  504,257
  539,343
  575,818
  613,747
  653,205
  694,270
  737,030
  781,574
  828,002
  876,415
  926,923
  979,643
  1,034,694
  1,092,207
  1,152,314
Total liabilities, $m
  114,157
  123,486
  141,108
  159,936
  179,942
  201,099
  223,385
  246,782
  271,278
  296,870
  323,560
  351,359
  380,283
  410,360
  441,622
  474,109
  507,869
  542,955
  579,430
  617,359
  656,817
  697,882
  740,642
  785,186
  831,614
  880,027
  930,535
  983,255
  1,038,306
  1,095,819
  1,155,926
Total equity, $m
  9,770
  13,721
  15,679
  17,771
  19,994
  22,344
  24,821
  27,420
  30,142
  32,986
  35,951
  39,040
  42,254
  45,596
  49,069
  52,679
  56,430
  60,328
  64,381
  68,595
  72,980
  77,542
  82,294
  87,243
  92,402
  97,781
  103,393
  109,251
  115,367
  121,758
  128,436
Total liabilities and equity, $m
  123,927
  137,207
  156,787
  177,707
  199,936
  223,443
  248,206
  274,202
  301,420
  329,856
  359,511
  390,399
  422,537
  455,956
  490,691
  526,788
  564,299
  603,283
  643,811
  685,954
  729,797
  775,424
  822,936
  872,429
  924,016
  977,808
  1,033,928
  1,092,506
  1,153,673
  1,217,577
  1,284,362
Debt-to-equity ratio
  11.315
  8.740
  8.770
  8.800
  8.820
  8.840
  8.850
  8.870
  8.880
  8.890
  8.900
  8.910
  8.910
  8.920
  8.930
  8.930
  8.940
  8.940
  8.940
  8.950
  8.950
  8.950
  8.960
  8.960
  8.960
  8.960
  8.970
  8.970
  8.970
  8.970
  8.970
Adjusted equity ratio
  0.082
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,033
  -1,887
  -2,136
  -2,471
  -2,831
  -3,215
  -3,622
  -4,052
  -4,504
  -4,979
  -5,475
  -5,941
  -6,482
  -7,044
  -7,629
  -8,237
  -8,869
  -9,526
  -10,208
  -10,917
  -11,654
  -12,421
  -13,219
  -14,049
  -14,913
  -15,814
  -16,753
  -17,732
  -18,753
  -19,819
  -20,933
Depreciation, amort., depletion, $m
  373
  168
  184
  202
  220
  240
  261
  283
  306
  330
  355
  329
  356
  384
  414
  444
  476
  508
  543
  578
  615
  654
  694
  735
  779
  824
  871
  921
  972
  1,026
  1,082
Funds from operations, $m
  1,728
  -1,719
  -1,952
  -2,270
  -2,611
  -2,975
  -3,361
  -3,769
  -4,198
  -4,649
  -5,120
  -5,612
  -6,125
  -6,660
  -7,215
  -7,793
  -8,393
  -9,017
  -9,665
  -10,339
  -11,039
  -11,767
  -12,525
  -13,313
  -14,134
  -14,990
  -15,881
  -16,811
  -17,781
  -18,793
  -19,851
Change in working capital, $m
  218
  391
  421
  450
  478
  505
  532
  559
  585
  611
  638
  664
  691
  718
  747
  776
  806
  838
  871
  906
  943
  981
  1,021
  1,064
  1,109
  1,157
  1,207
  1,259
  1,315
  1,374
  1,436
Cash from operations, $m
  1,510
  -2,111
  -2,373
  -2,720
  -3,089
  -3,480
  -3,893
  -4,328
  -4,783
  -5,260
  -5,758
  -6,276
  -6,816
  -7,378
  -7,962
  -8,569
  -9,200
  -9,855
  -10,537
  -11,245
  -11,982
  -12,748
  -13,546
  -14,378
  -15,243
  -16,146
  -17,088
  -18,070
  -19,096
  -20,167
  -21,287
Maintenance CAPEX, $m
  0
  -100
  -116
  -132
  -150
  -169
  -188
  -209
  -231
  -254
  -278
  -303
  -329
  -356
  -384
  -414
  -444
  -476
  -508
  -543
  -578
  -615
  -654
  -694
  -735
  -779
  -824
  -871
  -921
  -972
  -1,026
New CAPEX, $m
  -473
  -77
  -83
  -88
  -94
  -99
  -104
  -110
  -115
  -120
  -125
  -130
  -135
  -141
  -146
  -152
  -158
  -164
  -171
  -178
  -185
  -192
  -200
  -209
  -217
  -227
  -236
  -247
  -258
  -269
  -281
Cash from investing activities, $m
  -10,192
  -177
  -199
  -220
  -244
  -268
  -292
  -319
  -346
  -374
  -403
  -433
  -464
  -497
  -530
  -566
  -602
  -640
  -679
  -721
  -763
  -807
  -854
  -903
  -952
  -1,006
  -1,060
  -1,118
  -1,179
  -1,241
  -1,307
Free cash flow, $m
  -8,682
  -2,288
  -2,571
  -2,940
  -3,332
  -3,748
  -4,186
  -4,646
  -5,129
  -5,634
  -6,161
  -6,710
  -7,281
  -7,875
  -8,493
  -9,135
  -9,802
  -10,495
  -11,216
  -11,965
  -12,745
  -13,556
  -14,400
  -15,280
  -16,196
  -17,152
  -18,148
  -19,188
  -20,274
  -21,409
  -22,594
Issuance/(repayment) of debt, $m
  994
  14,661
  17,621
  18,828
  20,006
  21,157
  22,286
  23,397
  24,497
  25,592
  26,690
  27,798
  28,925
  30,077
  31,262
  32,487
  33,760
  35,087
  36,474
  37,929
  39,458
  41,066
  42,759
  44,545
  46,427
  48,413
  50,509
  52,719
  55,052
  57,512
  60,107
Issuance/(repurchase) of shares, $m
  316
  5,838
  4,094
  4,563
  5,054
  5,566
  6,098
  6,651
  7,226
  7,822
  8,441
  9,030
  9,695
  10,386
  11,102
  11,847
  12,620
  13,424
  14,261
  15,132
  16,039
  16,984
  17,970
  18,998
  20,072
  21,193
  22,365
  23,589
  24,870
  26,210
  27,612
Cash from financing (excl. dividends), $m  
  7,893
  20,499
  21,715
  23,391
  25,060
  26,723
  28,384
  30,048
  31,723
  33,414
  35,131
  36,828
  38,620
  40,463
  42,364
  44,334
  46,380
  48,511
  50,735
  53,061
  55,497
  58,050
  60,729
  63,543
  66,499
  69,606
  72,874
  76,308
  79,922
  83,722
  87,719
Total cash flow (excl. dividends), $m
  -731
  18,211
  19,144
  20,452
  21,728
  22,975
  24,198
  25,402
  26,593
  27,780
  28,970
  30,119
  31,339
  32,587
  33,871
  35,199
  36,578
  38,016
  39,519
  41,096
  42,752
  44,494
  46,329
  48,263
  50,303
  52,455
  54,725
  57,120
  59,647
  62,313
  65,125
Retained Cash Flow (-), $m
  -1,064
  -5,838
  -4,094
  -4,563
  -5,054
  -5,566
  -6,098
  -6,651
  -7,226
  -7,822
  -8,441
  -9,030
  -9,695
  -10,386
  -11,102
  -11,847
  -12,620
  -13,424
  -14,261
  -15,132
  -16,039
  -16,984
  -17,970
  -18,998
  -20,072
  -21,193
  -22,365
  -23,589
  -24,870
  -26,210
  -27,612
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  12,373
  15,050
  15,888
  16,674
  17,410
  18,100
  18,751
  19,367
  19,958
  20,529
  21,089
  21,644
  22,202
  22,769
  23,352
  23,958
  24,591
  25,258
  25,964
  26,713
  27,510
  28,359
  29,265
  30,231
  31,262
  32,360
  33,531
  34,777
  36,103
  37,513
Discount rate, %
 
  14.10
  14.81
  15.55
  16.32
  17.14
  18.00
  18.90
  19.84
  20.83
  21.87
  22.97
  24.12
  25.32
  26.59
  27.92
  29.31
  30.78
  32.32
  33.93
  35.63
  37.41
  39.28
  41.25
  43.31
  45.47
  47.75
  50.13
  52.64
  55.27
  58.04
PV of cash for distribution, $m
 
  10,844
  11,419
  10,300
  9,107
  7,894
  6,706
  5,583
  4,553
  3,635
  2,840
  2,169
  1,620
  1,180
  839
  581
  392
  257
  163
  101
  60
  35
  19
  10
  5
  3
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  79.2
  70.1
  62.1
  55.2
  49.2
  44.0
  39.3
  35.3
  31.7
  28.5
  25.6
  23.1
  20.9
  18.9
  17.1
  15.4
  14.0
  12.7
  11.5
  10.4
  9.4
  8.6
  7.8
  7.1
  6.4
  5.8
  5.3
  4.8
  4.4
  4.0

Northern Trust Corporation is a financial holding company. The Company provides asset servicing, fund administration, asset management, fiduciary and banking solutions for corporations, institutions, families and individuals across the world. Its segments include Corporate & Institutional Services (C&IS), Wealth Management, and Treasury and Other. The C&IS segment is a provider of asset servicing and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds and other institutional investors around the globe. The Wealth Management segment provides trust, investment management, custody and philanthropic services; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services, and private and business banking. It conducts its business through various subsidiaries.

FINANCIAL RATIOS  of  Northern Trust (NTRS)

Valuation Ratios
P/E Ratio 21.6
Price to Sales 4.4
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 14.8
Price to Free Cash Flow 21.5
Growth Rates
Sales Growth Rate 5.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 9%
Cap. Spend. - 3 Yr. Gr. Rate 4.2%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 31.8%
Total Debt to Equity 1131.5%
Interest Coverage 9
Management Effectiveness
Return On Assets 1%
Ret/ On Assets - 3 Yr. Avg. 0.9%
Return On Total Capital 0.9%
Ret/ On T. Cap. - 3 Yr. Avg. 0.9%
Return On Equity 11.2%
Return On Equity - 3 Yr. Avg. 10.8%
Asset Turnover 0
Profitability Ratios
Gross Margin 97%
Gross Margin - 3 Yr. Avg. 97%
EBITDA Margin 40.5%
EBITDA Margin - 3 Yr. Avg. 39.9%
Operating Margin 29.6%
Oper. Margin - 3 Yr. Avg. 28.9%
Pre-Tax Margin 29.6%
Pre-Tax Margin - 3 Yr. Avg. 28.9%
Net Profit Margin 20.2%
Net Profit Margin - 3 Yr. Avg. 19.5%
Effective Tax Rate 31.9%
Eff/ Tax Rate - 3 Yr. Avg. 32.4%
Payout Ratio 34.5%

NTRS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NTRS stock intrinsic value calculation we used $5117 million for the last fiscal year's total revenue generated by Northern Trust. The default revenue input number comes from 2016 income statement of Northern Trust. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our NTRS stock valuation model: a) initial revenue growth rate of 15.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 14.1%, whose default value for NTRS is calculated based on our internal credit rating of Northern Trust, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Northern Trust.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of NTRS stock the variable cost ratio is equal to 69.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for NTRS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Northern Trust.

Corporate tax rate of 27% is the nominal tax rate for Northern Trust. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the NTRS stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for NTRS are equal to 9.8%.

Life of production assets of 2.7 years is the average useful life of capital assets used in Northern Trust operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for NTRS is equal to 50%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $9770 million for Northern Trust - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 228.508 million for Northern Trust is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Northern Trust at the current share price and the inputted number of shares is $22.3 billion.

RELATED COMPANIES Price Int.Val. Rating
SEIC SEI Investment 70.96 33.56  sell
PZN Pzena Investme 10.85 97.84  str.buy

COMPANY NEWS

▶ Northern Trust Sponsors Akola Jewelry Displays   [Dec-14-17 09:00AM  Business Wire]
▶ JPMorgan Chase to offer discounts like Amazon   [Dec-08-17 11:08AM  Yahoo Finance Video]
▶ Northern Trust Earns IBD Rating Upgrade   [03:00AM  Investor's Business Daily]
▶ Bitcoin continues onward and upward   [Nov-28-17 11:09AM  Yahoo Finance Video]
▶ Northern Trust's McDonald Sees Stocks Advancing Higher   [Oct-19-17 12:53PM  Bloomberg Video]
▶ Northern Trust beats 3Q profit forecasts   [07:38AM  Associated Press]
▶ Northern Trust names new CEO   [Oct-17-17 06:20PM  American City Business Journals]
▶ Northern Trust's ETF Business Is Off to a Good Start   [Oct-13-17 07:00AM  Morningstar]
▶ Heres how Oranjs 'un-robo-advisor' saves you money   [Oct-10-17 01:21PM  Yahoo Finance Video]
▶ Which companies will do well under One Belt, One-Road?   [Oct-09-17 08:29PM  CNBC Videos]
▶ Northern Trust Supports Hurricane, Earthquake Relief   [Oct-04-17 10:43AM  Business Wire]
▶ Northern Trust Names New Head of Japan Office   [Oct-03-17 04:52AM  Business Wire]
▶ How Wall Street Analysts View State Street   [10:39AM  Market Realist]
▶ Northern Trust Appoints St. Louis President   [Sep-20-17 09:00AM  Business Wire]
▶ Goodman Theatre board elects Northern Trust executive to top post   [Sep-19-17 02:10PM  American City Business Journals]
▶ Northern Trust Supports Harvey Victims   [Sep-01-17 03:39PM  Business Wire]
▶ Opening Bell, August 24, 2017   [Aug-24-17 09:29AM  CNBC Videos]
▶ Asian markets mostly higher as Jackson Hole in focus   [Aug-23-17 11:55PM  Associated Press]
Financial statements of NTRS
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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