Is State Street Stock Fairly Priced?

Is State Street Stock Fairly Priced?

State Street stock (NYSE: STT) has doubled since the March lows of last year, and at its current price of $87 per share, it is 8% below its fair value of $95 – Trefis' estimate for State Street's valuation. Further, the U. S. bank stocks have seen strong growth in the year – the benchmark Dow Jones U. S. Banks Index is up 24% YTD. However, STT stock is slightly lagging the index (up 19% YTD). State Street reported $11. 7 billion in revenues for the full year 2020, which was marginally below the 2019 figure. While the bank reported some growth in the fee revenues driven by asset growth, it was more than offset by a 14% y-o-y decline in the net interest income. Further, the same trend continued in the first and second quarters of 2021, also. The custody banking giant outperformed the consensus estimates for revenues and earnings in the second quarter. It reported total revenues of $3 billion, which is 3% above the year-ago figure. This could be attributed to a 6% y-o-y growth in the fee income, mainly driven by higher servicing fees and management fees. The servicing fees benefited from growth in Assets under