State Street Corporation (NYSE:STT) has filed an 8-K with the Securities and Exchange Commission (SEC) detailing significant corporate actions, including modifications to security holder rights and amendments to its Articles of Incorporation. On Monday, the company entered into an agreement with Goldman Sachs (NYSE:GS) & Co. LLC and UBS Securities LLC to issue and sell 850,000 depositary shares, each representing a 1/100th interest in its newly designated Preferred Stock, Series J, with a liquidation preference of $100,000 per share.
The public offering was priced at $1,000 per Depositary Share, with State Street expecting net proceeds of approximately $842.2 million after deducting underwriting discounts and estimated offering expenses. The proceeds are intended to be used for general corporate purposes.
As part of these corporate actions, State Street amended its Articles of Organization to establish the preferences and rights of the Preferred Stock, Series J. The Articles of Amendment were filed with the Secretary of the Commonwealth of Massachusetts on July 18, 2024.
In connection with the issuance of the Depositary Shares, State Street anticipates entering into a deposit agreement with Equiniti Trust Company, LLC, which will act as the depositary. This agreement will govern the terms between the depositary and the holders of the depositary receipts representing the Depositary Shares.
The offering of the Depositary Shares is made under State Street's existing Registration Statement on Form S-3 and related prospectus supplements filed with the SEC.
This financial move comes as State Street continues to manage its capital structure and seeks to optimize its financial strategy. The Depositary Shares are traded on the New York Stock Exchange under the symbol STT.PRG.
In other recent news, State Street Corporation reported second-quarter 2024 earnings, revealing a slight decrease in earnings per share (EPS) to $2.15 from $2.17 the previous year. The figures surpassed the consensus estimate of $2.02. Following the announcement, management adjusted its 2024 guidance, anticipating a 4%-5% increase in fee revenues. The company also expects a slight rise in net interest income and aims to achieve positive fee operating leverage for 2024.
Analyst firms Argus, RBC Capital Markets, BofA Securities, Deutsche Bank (ETR:DBKGn), Evercore ISI, and CFRA all adjusted their price targets for State Street, with a mix of Buy, Hold, and Underperform ratings. The adjustments came in the wake of recent earnings results and the company's robust product and service offerings. The company's projected revenues are expected to reach $12.5 billion in 2024 and $12.9 billion in 2025.
State Street has also been appointed to service Galapagos (NASDAQ:GLPG) Capital's hedge funds, a move expected to enhance operational efficiency. However, Wolfe Research downgraded State Street's stock to Underperform due to concerns about the company's earnings per share growth through 2026. These are among the recent developments shaping the trajectory of State Street Corporation.
InvestingPro Insights
State Street Corporation's (NYSE:STT) recent corporate actions reflect a strategic approach to capital management, and the insights from InvestingPro provide a deeper understanding of the company's financial health. With a solid market capitalization of $25.09 billion and a P/E ratio standing at 15.55, State Street appears to be valued reasonably in the market. The company's commitment to shareholder returns is evident through its impressive track record of raising dividends for 13 consecutive years and maintaining dividend payments for over half a century. Additionally, the 20.63% dividend growth in the last twelve months as of Q2 2024 further underscores its ability to increase shareholder value.
Investors may also take note of the company's stock performance, which has been strong with a 17.37% price total return over the last month and a 24.11% return over the past year, trading near its 52-week high. Analysts have taken a positive view, with seven of them revising their earnings upwards for the upcoming period, and they predict the company will remain profitable this year.
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