State Street Corporation (STT)

The base case represents the modal expected path, where State Street executes on steady organic growth across core Investment Servicing ($6,681M in FY2025) and Investment Management ($2,568M). Pretax margin expands toward management's 32% objective, driven by positive operating leverage and $750M in productivity initiatives, partially offset by planned expense growth of roughly 8%. Capital intensity steps down gradually from 1.9x D&A toward 10% reinvestment of NOPAT, while disciplined share buybacks continue at ~$1.2B annually. Discounted at a moderate cost of equity of 10.163% and anchored on a 12.0x exit multiple, this yields the house Fair value of $174.77.

• Revenue growth is projected at 14.06% in FY2026 ($15,905M), 4.98% in FY2027 ($16,697M), 4.5% in FY2028, 4.0% in FY2029, and 3.5% in FY2030.
• Operating margin improves from 26.76% in FY2025 through FY2026 and stabilizes across FY2028-FY2030.
• Reinvestment rate steps down from 16.0% in FY2026 to 14.0% in FY2027 and reaches a terminal 10.0% by FY2029-FY2030.
• Diluted EPS tracks consensus estimates: $13.73 in FY2026 and $15.40 in FY2027, reaching $18.51 by FY2030.
• Share repurchases contract diluted share count by 3.0% in FY2026, tapering to 1.0% in FY2030.
• Effective operating tax rate is held constant at 19.76%, and exit terminal multiple is set at 12.0x.