Why Northern Trust Corporation (NTRS) Offers Attractive Growth Potential Despite a "Hold" Zacks Rank

Northern Trust Corporation (NTRS) has long been a cornerstone of the global financial services industry, and its 2025 performance underscores its resilience and strategic adaptability. Despite a Zacks Rank of #3 ("Hold"), the company's strong Growth and Value-Growth-Momentum (VGM) Style Scores, coupled with consistent earnings revisions and robust financial fundamentals, present a compelling case for long-term investors. This analysis delves into the factors that position NTRS as a high-conviction growth stock, even amid mixed market signals.

Strong Growth and VGM Style Scores Signal Outperformance Potential

Northern Trust's Growth Style Score of B reflects an anticipated 12.6% year-over-year earnings growth for the current fiscal year. This metric, combined with a VGM Style Score of B as of December 2025, highlights the company's balanced blend of value, growth, and momentum characteristics. While the Zacks Rank suggests caution, the VGM Score's emphasis on momentum and growth-driven by upward revisions to earnings estimates and a historical average earnings surprise of +4.6%-indicates a higher likelihood of outperformance.

Recent data further reinforces this narrative. For instance, NTRS's fourth-quarter 2024 results demonstrated a 26% year-over-year revenue increase to $1.97 billion, alongside a net income per diluted share of $2.26, a stark improvement from $0.52 in the prior-year period. These figures align with the company's strong momentum component in its VGM profile, suggesting that its operational execution and market positioning are outpacing broader industry trends.

Consistent Earnings Revisions and Momentum-Driven Resilience

NTRS has experienced several upward revisions to its 2025 earnings estimates, reflecting investor and analyst confidence in its ability to navigate macroeconomic headwinds. While some reports note a recent downgrade of the VGM Score to C due to evolving market sentiment, the company's third-quarter 2025 performance-revenue of $2.02 billion, up 2.8% year-over-year-demonstrates its capacity to adapt and deliver results.

This resilience is further underscored by NTRS's asset growth. As of September 30, 2025, assets under custody reached $14.4 trillion, and assets under management climbed to $1.8 trillion. These metrics not only highlight the company's market leadership but also its ability to generate recurring revenue streams through trust and investment services, which are less cyclical than traditional banking activities.

Financial Fundamentals Justify Long-Term Optimism

Despite a high debt-to-equity ratio of 11.69 in earlier reports, NTRS has shown prudent debt management in recent quarters. As of December 5, 2025, the debt-to-equity ratio stood at 1.04, and for the three months ending June 30, 2025, it was 0.58. This trend suggests a strategic shift toward optimizing capital structure, which is critical for sustaining growth in a low-interest-rate environment.

The company's Return on Equity (ROE) of 12.88% further underscores its efficiency in generating shareholder value. While 2024 annual revenue grew by 31.02% compared to 2023, early 2025 saw a 0.04% decline in year-over-year revenue for the twelve months ending June 30, 2025. However, this volatility is largely attributable to macroeconomic factors, such as inflationary pressures and shifting client behavior, rather than operational shortcomings.

A critical argument for long-term investors lies in NTRS's intrinsic value. According to valuation models, the company's intrinsic value is estimated at $227.52 per share, significantly higher than its current market price of $139.28. This discount suggests that the market may be underappreciating NTRS's long-term growth prospects, particularly in its wealth management and asset servicing segments.

Addressing the Zacks Rank: A Nuanced Perspective

The Zacks Rank of #3 ("Hold") primarily reflects cautious expectations for short-term earnings revisions and market volatility. However, this assessment overlooks NTRS's structural strengths, including its diversified revenue streams, strong balance sheet, and leadership in high-growth areas like digital asset servicing. For instance, the company returned over $400 million to shareholders in Q4 2024, demonstrating its commitment to rewarding investors even amid a "Hold" rating.

Moreover, NTRS's VGM Style Score of B (or the recent downgrade to C) should be contextualized within broader market dynamics. While the downgrade signals some skepticism, the company's consistent outperformance in earnings and asset growth-coupled with its undervaluation-suggests that the market may eventually reprice its shares upward.

Conclusion: A High-Conviction Case for Growth

Northern Trust Corporation's 2025 performance exemplifies the intersection of disciplined capital allocation, operational excellence, and strategic foresight. While the Zacks Rank may temper short-term expectations, the company's strong Growth and VGM Style Scores, coupled with its robust financial fundamentals and undervaluation, make it an attractive long-term investment. For investors with a multi-year horizon, NTRS offers a unique opportunity to capitalize on its leadership in a transforming financial services landscape.