On Mar 21, 2013, we reiterated our long-term recommendation on
The Bank of New York Mellon Corporation
) at neutral based on its continued improvement in asset quality
and healthy capital ratios. However, a decline in top-line growth
and increase in operating expenses adversely affected the
BNY Mellon's fourth-quarter 2012 earnings came in at 53 cents per
share, in line with the Zacks Consensus Estimate. Results were
mainly driven by improved asset quality and solid capital ratios.
Following its fourth-quarter results, the Zacks Consensus
Estimate for 2013 slipped 0.4% to $2.30 per share over the last
60 days. The Zacks Consensus Estimate for 2014 also fell 1.1% to
$2.59 per share over the same time frame. Hence, BNY Mellon
currently has a Zacks Rank #3 (Hold).
With the approval of BNY Mellon's capital plan by the Federal
Reserve, the company authorized a new share repurchase program
under which it plans to buyback $1.35 billion worth of stock
during the first quarter of 2014.
Moreover, BNY Mellon's expense savings program, healthy liquidity
position and significant foothold in the foreign markets are
expected to auger well for its long-term growth. Further, BNY
Mellon has numerous organic growth prospects and stands to
benefit from growth in the global market.
On the flip side, BNY Mellon's escalating expenses and pressure
on its net interest margin remains a concern. Moreover, a
sluggish economic recovery, a persistent low-interest rate
environment and the changing regulatory landscape are expected to
undermine its revenue growth in the subsequent quarters.
Other Major Banks to Consider
Other major banks that are performing better than BNY Mellon and
are worth a look include
State Street Corporation
Fifth Third Bancorp
). All these stocks carry a Zacks Rank #2 (Buy).
BANK OF NY MELL (BK): Free Stock Analysis
CITIGROUP INC (C): Free Stock Analysis Report
FIFTH THIRD BK (FITB): Free Stock Analysis
STATE ST CORP (STT): Free Stock Analysis
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