Bank Of New York Mellon Corporation (The) (BK) Buy or Sell Stock Guide

Last updated: Jun 04, '18

The analysis below may be helpful to you if you have any of the following questions about BK stock:

  • Is BK a buy or a sell?
  • Should I sell or hold BK stock today?
  • Is BK a good buy / a good investment?
  • What are BK analyst opinions, recommendations, ratings?

Here are BK stock buy reasons/signals:

1. BNY Mellon is poised to see an increase in revenues as interest rates rise, as investors become less cautious, and rising markets propel AUC and AUM levles higher.

2. Custody clients are incredibly sticky--CalPERS didn’t fire State Street even after it sued the bank for fraud--which gives custody banks a great deal of pricing power.

3. BNY Mellon’s revenues have been cyclically depressed, but the large amount of operating leverage in the business means that shareholder returns are likely to rise as markets normalize.

4. BK quarterly revenue growth was 8.70%, higher than the industry and sector average revenue growth (5.96% and 6.53%, respectively).

5. BK profitability is improving. The YoY profit margin change was 2.58pp.

6. BK forward dividend yield is 1.68%, higher than the industry (0.95%) and sector (1.19%) forward dividend yields.

7. BK average analyst rating is Buy.

Here are BK stock sell reasons/signals:

1. Assets under custody, which are two thirds fixed income, could fall as interest rates rise from historic lows.

2. Growing client demands for more transparent pricing structures for assets under custody are likely to put increasing pressure on revenues.

3. While management has said that it is focusing on organic growth, it may change its tune as the memory of the financial crisis fades. With markets near all-time highs, any acquisitions are likely to be pricey.

4. BK PEG ratio (P/E adjusted for growth) is 1.45, and it’s high compared to its industry peers’ PEG ratios.

What are your thoughts on BK?

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