Intrinsic value of Northern Trust - NTRS

Previous Close

$107.66

  Intrinsic Value

$20.86

stock screener

  Rating & Target

str. sell

-81%

Previous close

$107.66

 
Intrinsic value

$20.86

 
Up/down potential

-81%

 
Rating

str. sell

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 2017), $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 24.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.30
  7.97
  7.67
  7.41
  7.17
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
  5.19
  5.17
  5.16
Revenue, $m
  5,851
  6,318
  6,803
  7,306
  7,830
  8,374
  8,939
  9,528
  10,139
  10,776
  11,439
  12,129
  12,849
  13,599
  14,381
  15,198
  16,051
  16,942
  17,873
  18,846
  19,864
  20,929
  22,043
  23,210
  24,432
  25,711
  27,052
  28,456
  29,928
  31,471
Variable operating expenses, $m
  4,073
  4,397
  4,735
  5,085
  5,450
  5,828
  6,222
  6,631
  7,057
  7,500
  7,961
  8,442
  8,943
  9,465
  10,009
  10,578
  11,171
  11,792
  12,440
  13,117
  13,825
  14,567
  15,342
  16,154
  17,004
  17,895
  18,828
  19,805
  20,830
  21,904
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
  4,073
  4,397
  4,735
  5,085
  5,450
  5,828
  6,222
  6,631
  7,057
  7,500
  7,961
  8,442
  8,943
  9,465
  10,009
  10,578
  11,171
  11,792
  12,440
  13,117
  13,825
  14,567
  15,342
  16,154
  17,004
  17,895
  18,828
  19,805
  20,830
  21,904
Operating income, $m
  1,779
  1,921
  2,068
  2,221
  2,380
  2,546
  2,718
  2,896
  3,082
  3,276
  3,477
  3,687
  3,906
  4,134
  4,372
  4,620
  4,879
  5,150
  5,433
  5,729
  6,039
  6,362
  6,701
  7,056
  7,427
  7,816
  8,224
  8,651
  9,098
  9,567
EBITDA, $m
  15,993
  17,268
  18,593
  19,970
  21,401
  22,888
  24,433
  26,041
  27,713
  29,453
  31,264
  33,151
  35,118
  37,168
  39,307
  41,540
  43,871
  46,305
  48,850
  51,510
  54,293
  57,203
  60,249
  63,438
  66,777
  70,274
  73,937
  77,776
  81,799
  86,016
Interest expense (income), $m
  182
  4,302
  4,135
  4,607
  5,098
  5,608
  6,138
  6,689
  7,262
  7,857
  8,477
  9,121
  9,792
  10,491
  11,220
  11,979
  12,772
  13,599
  14,462
  15,364
  16,307
  17,292
  18,323
  19,401
  20,530
  21,711
  22,948
  24,243
  25,600
  27,022
  28,513
Earnings before tax, $m
  -2,523
  -2,215
  -2,539
  -2,877
  -3,228
  -3,593
  -3,972
  -4,365
  -4,775
  -5,201
  -5,644
  -6,105
  -6,585
  -7,086
  -7,607
  -8,151
  -8,719
  -9,312
  -9,931
  -10,578
  -11,254
  -11,961
  -12,700
  -13,474
  -14,284
  -15,131
  -16,019
  -16,950
  -17,924
  -18,945
Tax expense, $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
Net income, $m
  -2,523
  -2,215
  -2,539
  -2,877
  -3,228
  -3,593
  -3,972
  -4,365
  -4,775
  -5,201
  -5,644
  -6,105
  -6,585
  -7,086
  -7,607
  -8,151
  -8,719
  -9,312
  -9,931
  -10,578
  -11,254
  -11,961
  -12,700
  -13,474
  -14,284
  -15,131
  -16,019
  -16,950
  -17,924
  -18,945

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  121,905
  131,621
  141,720
  152,216
  163,122
  174,457
  186,239
  198,491
  211,235
  224,497
  238,305
  252,688
  267,678
  283,307
  299,611
  316,628
  334,395
  352,955
  372,351
  392,629
  413,835
  436,021
  459,239
  483,545
  508,995
  535,650
  563,575
  592,835
  623,501
  655,645
Adjusted assets (=assets-cash), $m
  121,905
  131,621
  141,720
  152,216
  163,122
  174,457
  186,239
  198,491
  211,235
  224,497
  238,305
  252,688
  267,678
  283,307
  299,611
  316,628
  334,395
  352,955
  372,351
  392,629
  413,835
  436,021
  459,239
  483,545
  508,995
  535,650
  563,575
  592,835
  623,501
  655,645
Revenue / Adjusted assets
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
  0.048
Average production assets, $m
  142,143
  153,472
  165,248
  177,486
  190,203
  203,420
  217,158
  231,443
  246,303
  261,767
  277,868
  294,639
  312,117
  330,341
  349,352
  369,193
  389,910
  411,551
  434,167
  457,811
  482,539
  508,408
  535,481
  563,821
  593,496
  624,577
  657,137
  691,255
  727,012
  764,492
Working capital, $m
  -138,363
  -149,391
  -160,854
  -172,766
  -185,145
  -198,010
  -211,383
  -225,289
  -239,753
  -254,806
  -270,478
  -286,803
  -303,817
  -321,556
  -340,061
  -359,375
  -379,541
  -400,607
  -422,622
  -445,637
  -469,706
  -494,888
  -521,240
  -548,827
  -577,713
  -607,967
  -639,662
  -672,872
  -707,678
  -744,162
Total debt, $m
  76,576
  85,321
  94,410
  103,856
  113,672
  123,873
  134,477
  145,504
  156,973
  168,909
  181,337
  194,281
  207,772
  221,838
  236,512
  251,827
  267,817
  284,522
  301,978
  320,228
  339,314
  359,281
  380,177
  402,052
  424,957
  448,947
  474,079
  500,413
  528,012
  556,942
Total liabilities, $m
  109,715
  118,459
  127,548
  136,994
  146,810
  157,011
  167,615
  178,642
  190,111
  202,048
  214,475
  227,420
  240,910
  254,976
  269,650
  284,965
  300,956
  317,660
  335,116
  353,366
  372,452
  392,419
  413,315
  435,190
  458,095
  482,085
  507,217
  533,551
  561,151
  590,080
Total equity, $m
  12,191
  13,162
  14,172
  15,222
  16,312
  17,446
  18,624
  19,849
  21,123
  22,450
  23,831
  25,269
  26,768
  28,331
  29,961
  31,663
  33,440
  35,296
  37,235
  39,263
  41,384
  43,602
  45,924
  48,354
  50,899
  53,565
  56,357
  59,283
  62,350
  65,564
Total liabilities and equity, $m
  121,906
  131,621
  141,720
  152,216
  163,122
  174,457
  186,239
  198,491
  211,234
  224,498
  238,306
  252,689
  267,678
  283,307
  299,611
  316,628
  334,396
  352,956
  372,351
  392,629
  413,836
  436,021
  459,239
  483,544
  508,994
  535,650
  563,574
  592,834
  623,501
  655,644
Debt-to-equity ratio
  6.280
  6.480
  6.660
  6.820
  6.970
  7.100
  7.220
  7.330
  7.430
  7.520
  7.610
  7.690
  7.760
  7.830
  7.890
  7.950
  8.010
  8.060
  8.110
  8.160
  8.200
  8.240
  8.280
  8.310
  8.350
  8.380
  8.410
  8.440
  8.470
  8.490
Adjusted equity ratio
  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
  -2,523
  -2,215
  -2,539
  -2,877
  -3,228
  -3,593
  -3,972
  -4,365
  -4,775
  -5,201
  -5,644
  -6,105
  -6,585
  -7,086
  -7,607
  -8,151
  -8,719
  -9,312
  -9,931
  -10,578
  -11,254
  -11,961
  -12,700
  -13,474
  -14,284
  -15,131
  -16,019
  -16,950
  -17,924
  -18,945
Depreciation, amort., depletion, $m
  14,214
  15,347
  16,525
  17,749
  19,020
  20,342
  21,716
  23,144
  24,630
  26,177
  27,787
  29,464
  31,212
  33,034
  34,935
  36,919
  38,991
  41,155
  43,417
  45,781
  48,254
  50,841
  53,548
  56,382
  59,350
  62,458
  65,714
  69,126
  72,701
  76,449
Funds from operations, $m
  11,691
  13,133
  13,985
  14,872
  15,792
  16,749
  17,744
  18,779
  19,855
  20,976
  22,143
  23,359
  24,626
  25,948
  27,328
  28,768
  30,272
  31,843
  33,486
  35,204
  37,000
  38,880
  40,848
  42,908
  45,066
  47,326
  49,694
  52,176
  54,777
  57,504
Change in working capital, $m
  -10,604
  -11,028
  -11,463
  -11,912
  -12,379
  -12,865
  -13,373
  -13,906
  -14,465
  -15,053
  -15,672
  -16,325
  -17,013
  -17,739
  -18,505
  -19,314
  -20,166
  -21,066
  -22,015
  -23,015
  -24,070
  -25,181
  -26,353
  -27,587
  -28,886
  -30,254
  -31,695
  -33,211
  -34,806
  -36,484
Cash from operations, $m
  22,295
  24,160
  25,448
  26,784
  28,171
  29,614
  31,117
  32,685
  34,320
  36,029
  37,815
  39,684
  41,640
  43,688
  45,833
  48,081
  50,438
  52,909
  55,501
  58,219
  61,070
  64,062
  67,201
  70,495
  73,952
  77,580
  81,389
  85,386
  89,583
  93,988
Maintenance CAPEX, $m
  -13,126
  -14,214
  -15,347
  -16,525
  -17,749
  -19,020
  -20,342
  -21,716
  -23,144
  -24,630
  -26,177
  -27,787
  -29,464
  -31,212
  -33,034
  -34,935
  -36,919
  -38,991
  -41,155
  -43,417
  -45,781
  -48,254
  -50,841
  -53,548
  -56,382
  -59,350
  -62,458
  -65,714
  -69,126
  -72,701
New CAPEX, $m
  -10,885
  -11,329
  -11,776
  -12,238
  -12,717
  -13,216
  -13,738
  -14,285
  -14,860
  -15,464
  -16,100
  -16,771
  -17,478
  -18,224
  -19,011
  -19,841
  -20,717
  -21,641
  -22,616
  -23,644
  -24,727
  -25,869
  -27,073
  -28,340
  -29,675
  -31,081
  -32,561
  -34,118
  -35,757
  -37,481
Cash from investing activities, $m
  -24,011
  -25,543
  -27,123
  -28,763
  -30,466
  -32,236
  -34,080
  -36,001
  -38,004
  -40,094
  -42,277
  -44,558
  -46,942
  -49,436
  -52,045
  -54,776
  -57,636
  -60,632
  -63,771
  -67,061
  -70,508
  -74,123
  -77,914
  -81,888
  -86,057
  -90,431
  -95,019
  -99,832
  -104,883
  -110,182
Free cash flow, $m
  -1,715
  -1,383
  -1,675
  -1,979
  -2,294
  -2,622
  -2,963
  -3,317
  -3,684
  -4,066
  -4,462
  -4,874
  -5,302
  -5,748
  -6,212
  -6,695
  -7,198
  -7,723
  -8,271
  -8,842
  -9,438
  -10,062
  -10,713
  -11,393
  -12,105
  -12,850
  -13,629
  -14,445
  -15,299
  -16,194
Issuance/(repayment) of debt, $m
  -3,090
  8,744
  9,089
  9,446
  9,816
  10,201
  10,604
  11,026
  11,470
  11,936
  12,427
  12,945
  13,491
  14,066
  14,674
  15,315
  15,991
  16,704
  17,456
  18,250
  19,086
  19,967
  20,896
  21,875
  22,905
  23,990
  25,132
  26,334
  27,599
  28,930
Issuance/(repurchase) of shares, $m
  15,128
  3,186
  3,549
  3,927
  4,319
  4,726
  5,150
  5,591
  6,049
  6,527
  7,025
  7,543
  8,084
  8,649
  9,238
  9,853
  10,496
  11,168
  11,870
  12,605
  13,374
  14,179
  15,022
  15,904
  16,829
  17,797
  18,812
  19,876
  20,991
  22,160
Cash from financing (excl. dividends), $m  
  12,038
  11,930
  12,638
  13,373
  14,135
  14,927
  15,754
  16,617
  17,519
  18,463
  19,452
  20,488
  21,575
  22,715
  23,912
  25,168
  26,487
  27,872
  29,326
  30,855
  32,460
  34,146
  35,918
  37,779
  39,734
  41,787
  43,944
  46,210
  48,590
  51,090
Total cash flow (excl. dividends), $m
  10,322
  10,547
  10,964
  11,394
  11,840
  12,305
  12,791
  13,300
  13,835
  14,398
  14,990
  15,614
  16,273
  16,967
  17,700
  18,473
  19,288
  20,149
  21,056
  22,013
  23,022
  24,085
  25,205
  26,386
  27,628
  28,937
  30,315
  31,765
  33,290
  34,895
Retained Cash Flow (-), $m
  -15,128
  -3,186
  -3,549
  -3,927
  -4,319
  -4,726
  -5,150
  -5,591
  -6,049
  -6,527
  -7,025
  -7,543
  -8,084
  -8,649
  -9,238
  -9,853
  -10,496
  -11,168
  -11,870
  -12,605
  -13,374
  -14,179
  -15,022
  -15,904
  -16,829
  -17,797
  -18,812
  -19,876
  -20,991
  -22,160
Prev. year cash balance distribution, $m
  414
  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
  -4,392
  7,361
  7,414
  7,467
  7,521
  7,579
  7,641
  7,710
  7,786
  7,871
  7,965
  8,071
  8,188
  8,318
  8,462
  8,620
  8,792
  8,981
  9,186
  9,408
  9,648
  9,906
  10,184
  10,481
  10,800
  11,140
  11,503
  11,889
  12,300
  12,736
Discount rate, %
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.18
  22.23
  23.35
  24.51
  25.74
  27.03
  28.38
  29.80
  31.29
  32.85
  34.49
  36.22
  38.03
  39.93
  41.93
  44.02
  46.22
  48.53
  50.96
  53.51
PV of cash for distribution, $m
  -3,886
  5,699
  4,961
  4,262
  3,612
  3,017
  2,483
  2,011
  1,602
  1,254
  963
  725
  535
  386
  273
  188
  126
  82
  52
  32
  19
  11
  6
  3
  2
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  39.6
  31.2
  24.4
  19.0
  14.8
  11.4
  8.8
  6.7
  5.1
  3.9
  3.0
  2.3
  1.7
  1.3
  1.0
  0.7
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0

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 23.8
Price to Sales 4.8
Price to Book 2.5
Price to Tangible Book
Price to Cash Flow 16.3
Price to Free Cash Flow 23.7
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 $5403 million for the last fiscal year's total revenue generated by Northern Trust. The default revenue input number comes from 2017 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 8.3% 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 13%, 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 69.6%.

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 5.4% 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 2429.2%.

Life of production assets of 10 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 -2364.6%. 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 - $0 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 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 $24.5 billion.

RELATED COMPANIES Price Int.Val. Rating
WTFC Wintrust Finan 90.36 13.28  str.sell
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COMPANY NEWS

▶ [$$] Turkish lira crisis starts to hit other emerging markets   [Aug-13-18 06:06AM  Financial Times]
▶ Northern Trust's Douglas Morton on China FX Reserves   [Aug-07-18 09:00AM  Bloomberg Video]
▶ Financial Services Firm Opens Doors to Crypto Hedge Funds   [Aug-02-18 04:41PM  Bitcoin Magazine]
▶ Financial Stocks Showing Relative Strength   [Jul-27-18 03:15PM  Investopedia]
▶ These Top Bank Stocks Are Rallying, Near Buy Points On This Good News   [Jul-23-18 04:33PM  Investor's Business Daily]
▶ Longtime Houston wealth management exec hired by recruiting firm   [02:34PM  American City Business Journals]
▶ Finding Value In A New High-Yield ETF   [Jul-18-18 05:16PM  Benzinga]
▶ Earnings Preview For Northern Trust   [04:14PM  Benzinga]
▶ Northern Trust COO Jana Schreuder to Retire   [Jul-11-18 04:32PM  Business Wire]
▶ Northern Trust CEO takes helm of MCA board   [Jul-05-18 02:10PM  American City Business Journals]
▶ Northern Trust Completes Technology Acquisition   [Jun-29-18 09:30AM  Business Wire]
▶ Fed finds biggest US banks strong enough to survive shock   [Jun-21-18 07:00PM  Associated Press]
▶ Northern Trust Raises Prime Rate   [Jun-14-18 10:49AM  Business Wire]
▶ Making the Case for a Fed Hike and Hold   [Jun-12-18 08:33AM  Bloomberg Video]
▶ Northern Trust Strengthens Wealth Advisor Practice   [Jun-07-18 09:30AM  Business Wire]
▶ Northern Trust Names New Head of Sales for Asia-Pacific   [May-22-18 10:00PM  Business Wire]
▶ Forget bank branches - it's all about the app   [May-03-18 01:49PM  Yahoo Finance Video]
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