State Street Corporation (STT): This Financial Is One of the Best Bargains in the Industry

State Street Corporation (NYSE:STT) is one of the leading bank holding companies that serves institutional investors. The company has over $25 trillion in assets under custody and $2 trillion in assets under management, with operations in 26 countries worldwide. With shares up about 70% over the past year, should shareholders cash in and take their profits, or is there still more room to the upside? Would our investment dollars be better spent on another financial institution?

About State Street

State Street Corporation (NYSE:STT) provides services to institutional investors as a custodian bank through its subsidiary State Street Bank and Trust Company, and provides investment management services to mutual funds and other asset managers through State Street Global Advisors. The company’s customers include mutual funds, other collective investment funds, pension funds, insurance companies, and non-profits.

State Street operates in two distinct lines of business. The company’s investment servicing business makes up 66% of the company’s net revenues and provides such services as custody, accounting, administration, record keeping, foreign exchange, brokerage services, financing, analytics and more. State Street Corporation (NYSE:STT)’s investment management business accounts for 11% of the company’s revenues; it offers a variety of investment management and research services, and includes the State Street family of ETFs, which is the second largest ETF family in the U.S. in terms of assets under management. The remaining 23% of State Street’s revenue comes from the interest income on the company’s investment portfolio.

Ambitious growth plans

State Street Corporation (NYSE:STT) has set some pretty ambitious goals for itself. At the end of 2010, the company set the goal of doubling its international revenues over the following five year period (by the end of 2015), using both acquisitions and organic growth to accomplish this. As of the end of fiscal year 2012, the company’s non-U.S. assets under custody were 38% of the company’s total, and the company is well on its way to meeting its goal. The company has been especially aggressive in trying to grow its business in under-served European and Asian markets.

Also, the trend towards ETFs and away from traditional mutual funds should help the company grow its assets under management domestically, and State Street’s broad array of ETF offerings should allow for a faster growth rate than its competitors.