State Street reports Q3 earnings October 23

What's Happening

State Street ( STT ) is on deck to report its third-quarter numbers October 23. Analysts expect the company to post quarterly earnings of $1.61, versus $1.29 during the same period last year, and the stock has appreciated 24.7% on the year.

Technical Analysis

STT was recently trading at $98.86, down $1.13 from its 12-month high and $30.18 above its 12-month low. Technical indicators for STT are bullish and the stock is in a strong upward trend. The stock has recent support above $95.00 and has recent resistance below $100.00. Of the 14 analysts who cover the stock, four rate it a "strong buy", and 10 rate it a "hold". STT gets a score of 78 from InvestorsObserver's Stock Score Report.

Analyst's Thoughts

STT has been a solid performer over the last year, as Wall Street has rallied behind the financial sector due to rising interest rates and President Trump's determination to remove restrictions placed on the sector during the financial crisis. STT has risen a hefty 24.7% on the year, and analysts see modest additional upside. The stock is trading at $98.86, with an average price target of $101.75. STT has a P/E of 18.2, is seems more than reasonable considering analysts forecast earnings growth of 20.2%S during the current year, and 12.5% next year. The consensus calls for earnings of $1.61 per share, but the street has a slightly higher whisper of $1.64, suggesting an earnings beat, which would be the eighth straight quarter of stronger than expected profits. It has been a pretty good earnings season so far for the big financials that have already reported, and I expect STT will follow the trend with a strong report of its own.

Stock Only Trade

If you're looking to establish a long stock position in STT, consider buying the stock under $99.00. Sell if it falls below $89.00 or take profits if it gets to $114.00.

Bullish Trade

If you want to set up a bullish hedged trade on STT, consider a January 82.50/87.50 bull-put credit spread for a 30-cent credit. That's a potential 6.4% return (25.6% annualized*) and the stock would have to fall 11.2% to cause a problem.

Bearish Trade

If you want to take a bearish stance on the stock at this time, consider a January 100/115 bear-call credit spread for a 30-cent credit. That's a potential 6.4% return (25.6% annualized*) and the stock would have to rise 11.6% to cause a problem.

Covered Call Trade

If you like the stock, but wish to lower your cost basis on a new position, you may want to consider a January $100.00 covered call. Buy STT shares (typically 100 shares, scale as appropriate), while selling the January $100.00 call for a debit of $95.75 per share. The trade has a target assigned return of 4.4%, and a target annualized return of 18.0% (for comparison purposes only).

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