Intrinsic value of Northern Trust - NTRS

Previous Close

$91.92

  Intrinsic Value

$11.00

stock screener

  Rating & Target

str. sell

-88%

  Value-price divergence*

-116%

Previous close

$91.92

 
Intrinsic value

$11.00

 
Up/down potential

-88%

 
Rating

str. sell

 
Value-price divergence*

-116%

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

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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 21.0

 

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
  2.40
  2.66
  2.89
  3.10
  3.29
  3.46
  3.62
  3.76
  3.88
  3.99
  4.09
  4.18
  4.27
  4.34
  4.41
  4.46
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
Revenue, $m
  5,117
  5,240
  5,379
  5,535
  5,707
  5,895
  6,099
  6,320
  6,557
  6,811
  7,083
  7,373
  7,682
  8,010
  8,357
  8,725
  9,115
  9,527
  9,962
  10,421
  10,905
  11,416
  11,954
  12,522
  13,119
  13,747
  14,409
  15,105
  15,838
  16,608
  17,418
Variable operating expenses, $m
 
  3,651
  3,747
  3,854
  3,972
  4,101
  4,241
  4,393
  4,556
  4,730
  4,917
  5,064
  5,276
  5,501
  5,740
  5,993
  6,261
  6,543
  6,842
  7,158
  7,490
  7,841
  8,211
  8,601
  9,011
  9,443
  9,897
  10,375
  10,878
  11,407
  11,964
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
  3,651
  3,747
  3,854
  3,972
  4,101
  4,241
  4,393
  4,556
  4,730
  4,917
  5,064
  5,276
  5,501
  5,740
  5,993
  6,261
  6,543
  6,842
  7,158
  7,490
  7,841
  8,211
  8,601
  9,011
  9,443
  9,897
  10,375
  10,878
  11,407
  11,964
Operating income, $m
  1,517
  1,589
  1,633
  1,681
  1,735
  1,794
  1,858
  1,927
  2,001
  2,081
  2,166
  2,309
  2,406
  2,508
  2,617
  2,732
  2,854
  2,983
  3,119
  3,263
  3,415
  3,575
  3,743
  3,921
  4,108
  4,305
  4,512
  4,730
  4,960
  5,201
  5,454
EBITDA, $m
  1,890
  1,744
  1,790
  1,842
  1,899
  1,961
  2,029
  2,103
  2,182
  2,266
  2,357
  2,453
  2,556
  2,665
  2,781
  2,903
  3,033
  3,170
  3,315
  3,467
  3,629
  3,799
  3,978
  4,166
  4,365
  4,574
  4,795
  5,026
  5,270
  5,526
  5,796
Interest expense (income), $m
  182
  3,682
  3,712
  3,814
  3,928
  4,054
  4,192
  4,341
  4,503
  4,677
  4,863
  5,063
  5,275
  5,501
  5,741
  5,996
  6,265
  6,551
  6,852
  7,171
  7,507
  7,862
  8,237
  8,631
  9,046
  9,484
  9,944
  10,429
  10,939
  11,476
  12,040
Earnings before tax, $m
  1,517
  -2,094
  -2,079
  -2,133
  -2,193
  -2,260
  -2,334
  -2,414
  -2,502
  -2,596
  -2,697
  -2,754
  -2,869
  -2,993
  -3,124
  -3,263
  -3,411
  -3,568
  -3,733
  -3,908
  -4,093
  -4,287
  -4,493
  -4,710
  -4,938
  -5,179
  -5,432
  -5,699
  -5,980
  -6,275
  -6,586
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
  -2,094
  -2,079
  -2,133
  -2,193
  -2,260
  -2,334
  -2,414
  -2,502
  -2,596
  -2,697
  -2,754
  -2,869
  -2,993
  -3,124
  -3,263
  -3,411
  -3,568
  -3,733
  -3,908
  -4,093
  -4,287
  -4,493
  -4,710
  -4,938
  -5,179
  -5,432
  -5,699
  -5,980
  -6,275
  -6,586

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
  121,856
  125,097
  128,718
  132,714
  137,086
  141,835
  146,967
  152,488
  158,406
  164,730
  171,473
  178,648
  186,269
  194,351
  202,913
  211,972
  221,549
  231,666
  242,345
  253,612
  265,490
  278,010
  291,198
  305,087
  319,709
  335,098
  351,290
  368,323
  386,238
  405,077
Adjusted assets (=assets-cash), $m
  118,595
  121,856
  125,097
  128,718
  132,714
  137,086
  141,835
  146,967
  152,488
  158,406
  164,730
  171,473
  178,648
  186,269
  194,351
  202,913
  211,972
  221,549
  231,666
  242,345
  253,612
  265,490
  278,010
  291,198
  305,087
  319,709
  335,098
  351,290
  368,323
  386,238
  405,077
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
  514
  527
  542
  559
  578
  598
  619
  643
  668
  694
  723
  753
  785
  819
  855
  893
  934
  976
  1,021
  1,069
  1,119
  1,172
  1,227
  1,286
  1,347
  1,412
  1,480
  1,552
  1,628
  1,707
Working capital, $m
  0
  2,620
  2,690
  2,767
  2,853
  2,947
  3,049
  3,160
  3,278
  3,406
  3,542
  3,687
  3,841
  4,005
  4,179
  4,363
  4,557
  4,763
  4,981
  5,210
  5,453
  5,708
  5,977
  6,261
  6,559
  6,874
  7,205
  7,553
  7,919
  8,304
  8,709
Total debt, $m
  110,545
  106,058
  108,976
  112,234
  115,830
  119,765
  124,040
  128,659
  133,627
  138,953
  144,645
  150,714
  157,171
  164,030
  171,304
  179,009
  187,163
  195,782
  204,888
  214,499
  224,638
  235,329
  246,597
  258,467
  270,967
  284,126
  297,976
  312,549
  327,879
  344,002
  360,957
Total liabilities, $m
  114,157
  109,670
  112,588
  115,846
  119,442
  123,377
  127,652
  132,271
  137,239
  142,565
  148,257
  154,326
  160,783
  167,642
  174,916
  182,621
  190,775
  199,394
  208,500
  218,111
  228,250
  238,941
  250,209
  262,079
  274,579
  287,738
  301,588
  316,161
  331,491
  347,614
  364,569
Total equity, $m
  9,770
  12,186
  12,510
  12,872
  13,271
  13,709
  14,184
  14,697
  15,249
  15,841
  16,473
  17,147
  17,865
  18,627
  19,435
  20,291
  21,197
  22,155
  23,167
  24,235
  25,361
  26,549
  27,801
  29,120
  30,509
  31,971
  33,510
  35,129
  36,832
  38,624
  40,508
Total liabilities and equity, $m
  123,927
  121,856
  125,098
  128,718
  132,713
  137,086
  141,836
  146,968
  152,488
  158,406
  164,730
  171,473
  178,648
  186,269
  194,351
  202,912
  211,972
  221,549
  231,667
  242,346
  253,611
  265,490
  278,010
  291,199
  305,088
  319,709
  335,098
  351,290
  368,323
  386,238
  405,077
Debt-to-equity ratio
  11.315
  8.700
  8.710
  8.720
  8.730
  8.740
  8.750
  8.750
  8.760
  8.770
  8.780
  8.790
  8.800
  8.810
  8.810
  8.820
  8.830
  8.840
  8.840
  8.850
  8.860
  8.860
  8.870
  8.880
  8.880
  8.890
  8.890
  8.900
  8.900
  8.910
  8.910
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
  -2,094
  -2,079
  -2,133
  -2,193
  -2,260
  -2,334
  -2,414
  -2,502
  -2,596
  -2,697
  -2,754
  -2,869
  -2,993
  -3,124
  -3,263
  -3,411
  -3,568
  -3,733
  -3,908
  -4,093
  -4,287
  -4,493
  -4,710
  -4,938
  -5,179
  -5,432
  -5,699
  -5,980
  -6,275
  -6,586
Depreciation, amort., depletion, $m
  373
  155
  157
  160
  164
  167
  171
  176
  180
  185
  191
  145
  151
  157
  164
  171
  179
  187
  195
  204
  214
  224
  234
  245
  257
  269
  282
  296
  310
  326
  341
Funds from operations, $m
  1,728
  -1,939
  -1,922
  -1,972
  -2,029
  -2,093
  -2,162
  -2,239
  -2,321
  -2,410
  -2,506
  -2,609
  -2,719
  -2,836
  -2,960
  -3,092
  -3,232
  -3,381
  -3,538
  -3,704
  -3,879
  -4,064
  -4,259
  -4,464
  -4,681
  -4,909
  -5,150
  -5,403
  -5,669
  -5,949
  -6,244
Change in working capital, $m
  218
  61
  70
  78
  86
  94
  102
  110
  119
  127
  136
  145
  154
  164
  174
  184
  195
  206
  218
  230
  242
  255
  269
  284
  299
  314
  331
  348
  366
  385
  405
Cash from operations, $m
  1,510
  -2,000
  -1,992
  -2,050
  -2,115
  -2,187
  -2,265
  -2,349
  -2,440
  -2,538
  -2,642
  -2,754
  -2,873
  -3,000
  -3,134
  -3,276
  -3,427
  -3,587
  -3,755
  -3,933
  -4,121
  -4,319
  -4,528
  -4,748
  -4,980
  -5,224
  -5,481
  -5,751
  -6,035
  -6,335
  -6,649
Maintenance CAPEX, $m
  0
  -100
  -103
  -105
  -108
  -112
  -116
  -120
  -124
  -129
  -134
  -139
  -145
  -151
  -157
  -164
  -171
  -179
  -187
  -195
  -204
  -214
  -224
  -234
  -245
  -257
  -269
  -282
  -296
  -310
  -326
New CAPEX, $m
  -473
  -13
  -14
  -15
  -17
  -18
  -20
  -22
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -43
  -45
  -47
  -50
  -53
  -56
  -59
  -62
  -65
  -68
  -72
  -75
  -79
Cash from investing activities, $m
  -10,192
  -113
  -117
  -120
  -125
  -130
  -136
  -142
  -147
  -154
  -161
  -167
  -175
  -183
  -191
  -200
  -209
  -219
  -230
  -240
  -251
  -264
  -277
  -290
  -304
  -319
  -334
  -350
  -368
  -385
  -405
Free cash flow, $m
  -8,682
  -2,113
  -2,108
  -2,171
  -2,241
  -2,317
  -2,400
  -2,490
  -2,587
  -2,691
  -2,803
  -2,921
  -3,048
  -3,182
  -3,325
  -3,476
  -3,636
  -3,806
  -3,985
  -4,173
  -4,373
  -4,583
  -4,804
  -5,038
  -5,284
  -5,543
  -5,815
  -6,102
  -6,403
  -6,721
  -7,054
Issuance/(repayment) of debt, $m
  994
  845
  2,917
  3,258
  3,597
  3,935
  4,275
  4,619
  4,969
  5,326
  5,692
  6,069
  6,457
  6,859
  7,274
  7,705
  8,153
  8,620
  9,105
  9,611
  10,139
  10,691
  11,267
  11,870
  12,500
  13,159
  13,850
  14,573
  15,330
  16,123
  16,955
Issuance/(repurchase) of shares, $m
  316
  4,509
  2,404
  2,495
  2,593
  2,697
  2,809
  2,928
  3,054
  3,188
  3,330
  3,428
  3,587
  3,755
  3,932
  4,120
  4,317
  4,525
  4,745
  4,976
  5,219
  5,475
  5,745
  6,029
  6,327
  6,641
  6,971
  7,318
  7,683
  8,067
  8,470
Cash from financing (excl. dividends), $m  
  7,893
  5,354
  5,321
  5,753
  6,190
  6,632
  7,084
  7,547
  8,023
  8,514
  9,022
  9,497
  10,044
  10,614
  11,206
  11,825
  12,470
  13,145
  13,850
  14,587
  15,358
  16,166
  17,012
  17,899
  18,827
  19,800
  20,821
  21,891
  23,013
  24,190
  25,425
Total cash flow (excl. dividends), $m
  -731
  3,241
  3,213
  3,582
  3,949
  4,315
  4,683
  5,056
  5,435
  5,822
  6,219
  6,575
  6,996
  7,431
  7,881
  8,349
  8,834
  9,339
  9,865
  10,414
  10,986
  11,583
  12,208
  12,861
  13,543
  14,258
  15,006
  15,789
  16,610
  17,469
  18,370
Retained Cash Flow (-), $m
  -1,064
  -4,509
  -2,404
  -2,495
  -2,593
  -2,697
  -2,809
  -2,928
  -3,054
  -3,188
  -3,330
  -3,428
  -3,587
  -3,755
  -3,932
  -4,120
  -4,317
  -4,525
  -4,745
  -4,976
  -5,219
  -5,475
  -5,745
  -6,029
  -6,327
  -6,641
  -6,971
  -7,318
  -7,683
  -8,067
  -8,470
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
 
  -1,268
  809
  1,087
  1,356
  1,618
  1,875
  2,129
  2,382
  2,635
  2,890
  3,147
  3,409
  3,676
  3,949
  4,229
  4,517
  4,814
  5,121
  5,438
  5,767
  6,108
  6,463
  6,832
  7,216
  7,617
  8,035
  8,471
  8,927
  9,403
  9,901
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
 
  -1,111
  614
  705
  741
  733
  695
  634
  560
  480
  400
  324
  255
  195
  146
  105
  74
  50
  33
  21
  13
  8
  4
  2
  1
  1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  82.3
  75.4
  69.0
  63.1
  57.6
  52.6
  48.0
  43.8
  39.9
  36.3
  33.1
  30.2
  27.5
  25.0
  22.8
  20.7
  18.9
  17.2
  15.6
  14.2
  12.9
  11.7
  10.6
  9.7
  8.8
  8.0
  7.2
  6.6
  6.0
  5.4

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 20.3
Price to Sales 4.1
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 13.9
Price to Free Cash Flow 20.3
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 2.4% 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 228.463 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 $21.0 billion.

RELATED COMPANIES Price Int.Val. Rating
SEIC SEI Investment 63.72 33.48  sell
PZN Pzena Investme 11.88 82.34  str.buy

COMPANY NEWS

▶ 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]
▶ Two-thirds of U.S. investors think stocks are overvalued   [Jul-21-17 04:51PM  MarketWatch]
▶ Northern Trust misses Street 2Q forecasts   [Jul-19-17 10:47PM  Associated Press]
▶ Why Northern Trust is todays biggest stock loser   [04:52PM  American City Business Journals]
▶ Why Northern Trust is Crashing   [01:18PM  Barrons.com]
▶ Northern Trust Announces Leadership Changes   [Jul-17-17 04:05PM  Business Wire]
▶ Northern Trust Sees Positive U.K. Growth Short-Term   [Jul-04-17 02:36AM  Bloomberg Video]
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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