Critical Review: State Street (STT) versus Its Competitors

State Street (NYSE:STT) is one of 1,746 public companies in the “Capital Markets” industry, but how does it contrast to its competitors? We will compare State Street to related businesses based on the strength of its analyst recommendations, earnings, valuation, dividends, risk, profitability and institutional ownership.

Institutional & Insider Ownership

87.4% of State Street shares are owned by institutional investors. Comparatively, 30.6% of shares of all “Capital Markets” companies are owned by institutional investors. 0.3% of State Street shares are owned by insiders. Comparatively, 13.1% of shares of all “Capital Markets” companies are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk & Volatility

State Street has a beta of 1.38, meaning that its share price is 38% more volatile than the S&P 500. Comparatively, State Street’s competitors have a beta of 0.79, meaning that their average share price is 21% less volatile than the S&P 500.

Valuation and Earnings

This table compares State Street and its competitors revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
State Street	$22.63 billion	$2.94 billion	14.16
State Street Competitors	$2.38 billion	$398.05 million	15.01

State Street has higher revenue and earnings than its competitors. State Street is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for State Street and its competitors, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
State Street	0	6	11	0	2.65
State Street Competitors	5616	20218	22575	650	2.37

State Street currently has a consensus price target of $193.97, indicating a potential upside of 11.81%. As a group, “Capital Markets” companies have a potential upside of 23.40%. Given State Street’s competitors higher probable upside, analysts clearly believe State Street has less favorable growth aspects than its competitors.

Dividends

State Street pays an annual dividend of $3.68 per share and has a dividend yield of 2.1%. State Street pays out 30.0% of its earnings in the form of a dividend. As a group, “Capital Markets” companies pay a dividend yield of 3.2% and pay out 29.2% of their earnings in the form of a dividend. State Street has increased its dividend for 13 consecutive years. State Street lags its competitors as a dividend stock, given its lower dividend yield and higher payout ratio.

Profitability

This table compares State Street and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
State Street	15.81%	16.11%	1.00%
State Street Competitors	314.70%	9.80%	3.42%

Summary

State Street competitors beat State Street on 8 of the 15 factors compared.

State Street Company Profile

State Street Corporation is a financial services company headquartered in Boston, Massachusetts. Founded in 1792 as Union Bank, it has a long history serving institutional clients and is among the oldest financial institutions in the United States. The company provides investment servicing, including custody, fund administration, accounting, and related middle- and back-office services. Its clients include asset managers, pension funds, insurers, and other financial institutions. Through State Street Investment Management, the company also offers investment management services and investment products, including the SPDR family of exchange-traded funds.