Reviewing Northern Trust (NASDAQ:NTRS) and Truist Financial (NYSE:TFC)

Truist Financial (NYSE:TFC) and Northern Trust (NASDAQ:NTRS) are both large-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their earnings, risk, valuation, profitability, dividends, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Truist Financial and Northern Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Truist Financial	0	6	10	2	2.78
Northern Trust	3	8	2	0	1.92

Truist Financial presently has a consensus price target of $48.6471, suggesting a potential upside of 13.09%. Northern Trust has a consensus price target of $116.5833, suggesting a potential downside of 7.23%. Given Truist Financial’s stronger consensus rating and higher probable upside, research analysts clearly believe Truist Financial is more favorable than Northern Trust.

Risk and Volatility

Truist Financial has a beta of 0.87, indicating that its share price is 13% less volatile than the S&P 500. Comparatively, Northern Trust has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500.

Profitability

This table compares Truist Financial and Northern Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Truist Financial	16.82%	8.69%	0.95%
Northern Trust	11.75%	14.06%	1.04%

Valuation & Earnings

This table compares Truist Financial and Northern Trust”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Truist Financial	$24.25 billion	2.29	$4.82 billion	$3.67	11.72
Northern Trust	$16.06 billion	1.50	$2.03 billion	$8.51	14.77

Truist Financial has higher revenue and earnings than Northern Trust. Truist Financial is trading at a lower price-to-earnings ratio than Northern Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

Truist Financial pays an annual dividend of $2.08 per share and has a dividend yield of 4.8%. Northern Trust pays an annual dividend of $3.00 per share and has a dividend yield of 2.4%. Truist Financial pays out 56.7% of its earnings in the form of a dividend. Northern Trust pays out 35.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Institutional and Insider Ownership

71.3% of Truist Financial shares are owned by institutional investors. Comparatively, 83.2% of Northern Trust shares are owned by institutional investors. 0.2% of Truist Financial shares are owned by insiders. Comparatively, 0.8% of Northern Trust shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Truist Financial beats Northern Trust on 9 of the 17 factors compared between the two stocks.

About Truist Financial

Truist Financial Corporation, a financial services company, provides banking and trust services in the Southeastern and Mid-Atlantic United States. The company operates through three segments: Consumer Banking and Wealth, Corporate and Commercial Banking, and Insurance Holdings.Its deposit products include noninterest-bearing checking, interest-bearing checking, savings, and money market deposit accounts, as well as certificates of deposit and individual retirement accounts. The company also provides funding; asset management; automobile lending; credit card lending; consumer finance; home equity and mortgage lending; other direct retail lending; insurance; investment brokerage; mobile/online banking; payment solutions; point-of-sale lending; retail and small business deposit products; small business lending; and wealth management/private banking services. In addition, it offers asset based lending, investment banking and capital market, institutional trust, insurance premium finance, derivatives, commercial lending, international banking, leasing, merchant, commercial deposit and treasury, floor plan, mortgage warehouse lending, real estate lending, and supply chain financing services. Further, the company provides insurance brokerage, retail and wholesale brokerage, securities underwriting and market making, loan syndication, and investment management and advisory services. The company was formerly known as BB&T Corporation and changed its name to Truist Financial Corporation in December 2019. Truist Financial Corporation was founded in 1872 and is headquartered in Charlotte, North Carolina.

About Northern Trust

Northern Trust Corporation, a financial holding company, provides wealth management, asset servicing, asset management, and banking solutions for corporations, institutions, families, and individuals worldwide. It operates in two segments, Asset Servicing and Wealth Management. The Asset Servicing segment offers asset servicing and related services, including custody, fund administration, investment operations outsourcing, investment management, investment risk and analytical services, employee benefit services, securities lending, foreign exchange, treasury management, brokerage services, transition management services, banking, and cash management services. This segment serves corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds, and other institutional investors. The Wealth Management segment offers trust, investment management, custody, and philanthropic; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services; and private and business banking services. This segment serves high-net-worth individuals and families, business owners, executives, professionals, retirees, and established privately held businesses. The company also provides asset management services, such as active and passive equity; active and passive fixed income; cash management; muti-asset and alternative asset classes comprising private equity and hedge funds of funds; and multi-manager advisory services and products through separately managed accounts, bank common and collective funds, registered investment companies, exchange traded funds, non-U.S. collective investment funds, and unregistered private investment funds. In addition, it offers overlay and other risk management services. Northern Trust Corporation was founded in 1889 and is headquartered in Chicago, Illinois.