On Mar 5, 2014, we issued an updated research report on
The Bank of New York Mellon Corporation
). The company has recently reported in-line fourth-quarter 2013
results. Results were aided by top line as well as asset growth,
which were partially offset by increased provision for credit
losses and higher operating expenses. The company's fundamentals
look strong, but the macroeconomic headwinds across the industry
could drag its performance.
BNY Mellon reported fourth-quarter 2013 adjusted earnings of 54
cents per share, in line with the Zacks Consensus Estimate.
However, this was a penny higher than the earnings posted in the
BNY Mellon's performance in 2013 seemed decent as evident from
its earnings history. The company delivered positive earnings
surprises in 2013 with an average beat of 5.46%.
BNY Mellon's continuous improvement in its operating efficiencies
keeps organic growth in place. The company's revenues have grown
at a 5-year CAGR of 14.4% (2009-2013). Further, in 2013, the
company achieved the gross savings target of $636 million
(pre-tax basis) a year before. The targeted level of $650-$700
million was set for 2014.
Though BNY Mellon's fundamentals look promising, we believe
declining net interest margin (NIM) owing to a still low interest
rate environment and the stringent regulatory landscape may pose
threats to the company's financials in the near term.
Further, a bearish stance of analysts on this stock is evident
from the movement of the Zacks Consensus Estimate over the past
60 days. The Estimate for 2014 declined 2.8% to $2.43 per share.
Also, for 2015, it fell 2.5% to $2.71 per share.
BNY Mellon currently carries a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Stocks that are worth considering in the finance sector include
Fifth Third Bancorp
The PNC Financial Services Group, Inc.
The Goldman Sachs Group, Inc.
). All these stocks hold a Zacks Rank #2 (Buy).
BANK OF NY MELL (BK): Free Stock Analysis
FIFTH THIRD BK (FITB): Free Stock Analysis
GOLDMAN SACHS (GS): Free Stock Analysis
PNC FINL SVC CP (PNC): Free Stock Analysis
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