The Bank of New York Mellon Corp. – Value Analysis (NYSE:BK) : May 30, 2017

Capitalcube gives The Bank of New York Mellon Corp. a score of 39.

Our analysis is based on comparing The Bank of New York Mellon Corp. with the following peers – Northern Trust Corporation, Wells Fargo & Company, Citigroup Inc, Canadian Imperial Bank of Commerce, JPMorgan Chase & Co. and State Street Corporation (NTRS-US, WFC-US, C-US, CM-US, JPM-US and STT-US).

Fundamental Overview

The Bank of New York Mellon Corp. has a fundamental score of 39 and has a relative valuation of OVERVALUED.

Fundamental Score

Company Overview

  • It’s current Price/Book of 1.24 is about median in its peer group.
  • The market expects BK-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • BK-US‘s relative capital efficiency and net profit margins are both around the median level.
  • Changes in annual earnings (relative to peers) are better than the change in its revenues (relative to peers), implying the company is focused more on earnings.
  • BK-US‘s return on equity has improved from below median to about median among its peers over the last five years.
  • BK-US‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s equity capital investment program suggests it is under-investing in a business that is producing peer median returns.
  • BK-US might have enough interest coverage to take-on additional debt prudently.

Drivers of Margin

  • BK-US‘s lending operations might be constrained on pricing.
  • The company’s comparatively low proportion of net interest income (net interest income/total revenues) of 20.73% versus peer median of 48.38% suggests that BK-US‘s lending operations might be constrained on pricing. However, BK-US‘s pre-tax margin of 31.71% is around the peer median suggesting lower operating costs relative to peers.
  • The company’s comparatively healthy proportion of fee based income (i.e. non interest income/total revenues) of 79.27% versus peer median of 51.62% — suggests that BK-US‘s operating margins are likely to be less volatile. In addition, BK-US‘s proportion of overhead costs (i.e. non interest expense/total revenues) of 68.69x is around peer median — suggesting no cost advantage on fee-based overhead operations.
Drivers of Margins

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Differentiated; High Cost, Commodity; High Cost, Commodity; Low Cost

Company Profile

The Bank of New York Mellon Corp. is a bank holding company, which engages in the provision of financial services. It operates through the following segments: Investment Management, Investment Services, and Other. The Investment Management segment provides services on mutual funds and seed capital activities. The Investment Services segment includes institutional trust and custody fees, broker-dealer services, corporate trust, depositary receipts, and foreign exchange. The Other segment consists of leasing portfolio, corporate treasury, derivatives, and insurance services. The company was founded by Alexander Hamilton on July 1, 2007 and is headquartered in New York, NY.