We issued an updated research report on
The Bank of New York Mellon Corporation
) on June 3, 2014. The company's better-than-expected first-quarter
results, efficient cost-control measures and considerable organic
growth prospect seem impressive. However, we remain concerned about
the overall subdued economic scenario and stringent regulatory
BNY Mellon's released its first-quarter 2014 earnings on Apr 22.
Earnings not only surpassed the Zacks Consensus Estimate but also
rose 14.0% year over year. Results benefited from improvement in
net interest income, fee income and reduced expenses, partially
offset by lower benefit from provision.
Further, BNY Mellon's restructuring initiatives to control expenses
are commendable. Moreover, considering its healthy liquidity
position, the company is set to grow via acquisitions. Therefore,
going forward, we expect the top line to continue benefiting from
restructuring initiatives as well as meaningful acquisitions.
However, given the still low interest rate environment and sluggish
economic growth, BNY Mellon's interest income as well as net
interest margin continues to be under pressure. Also, the company's
excessive dependence on fee income might prove detrimental to its
financial health as these are prone to changes in individual
investment preferences, regulatory amendments or a slowdown in
capital market activities.
The Zacks Consensus Estimate for 2014 decreased 2.1% to $2.37 per
share over the last 60 days. For 2015, the Zacks Consensus Estimate
inched down 1.5% to $2.67 per share over the same time period.
Currently, BNY Mellon has a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Some better-ranked banks include
BofI Holding, Inc.
Central Pacific Financial Corp.
CVB Financial Corp.
). All these stocks sport a Zacks Rank #1 (Strong Buy).
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BANK OF NY MELL (BK): Free Stock Analysis
CENTRAL PAC FIN (CPF): Free Stock Analysis
CVB FINL (CVBF): Free Stock Analysis Report
BOFI HLDG INC (BOFI): Free Stock Analysis
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