The Bank of New York Mellon Corporation BK stock seems to be a solid bet now, based on underlying strength and growth prospects. With the improving interest rate environment, the company’s margin pressure has been easing, which is expected to aid top-line growth. Also, it is expected to benefit from potential lesser regulations and rising loan demand.
Of late, the company has been witnessing upward estimate revisions, indicating analysts’ optimism about its earnings growth potential. Earnings estimates for the current year were revised nearly 1.1% upward over the last 30 days.
As a result, the stock currently carries a Zacks Rank #2 (Buy).
The company’s price performance is also quite encouraging. Its shares have gained 17.2% in the last six months, outperforming the 4.2% growth for the industry it belongs to.
Moreover, the company has a number of other aspects that make it an attractive investment option.
Earnings per Share (EPS) Growth: BNY Mellon has witnessed EPS growth of nearly 12.1% in the past three-five years. Moreover, this earnings momentum is likely to continue in the near term as reflected by the company’s projected EPS growth of 11.2% and 12.5% for 2017 and 2018, respectively.
Also, the company’s long-term (five years) estimated EPS growth rate of 9% promises rewards for investors in the long run.
Effective Cost-Saving Initiatives: BNY Mellon’s cost-saving initiatives have continuously supported profitability. Expenses have declined at a three-year (2014-2016) CAGR of 7%. Moreover, despite the impact of investment-related expenses, the company remains well poised to lower its overall costs.
Strong Leverage: BNY Mellon’s debt/equity ratio is 0.79 against the industry average of 0.88, indicating a relatively lower debt burden. It also indicates the company’s financial stability even in adverse economic conditions.
Superior Return on Equity (ROE): BNY Mellon has an ROE of 8.91%, better than the industry average of 8.59%. This shows that the company reinvests its cash more efficiently.
Other Stocks to Consider
A few top-ranked stocks in the finance space are Carolina Financial Corporation CARO, Ameriprise Financial, Inc. AMP and T. Rowe Price Group, Inc. TROW.
Carolina Financial witnessed an upward earnings estimate revision of 4.5% for the current year, over the last 60 days. Its share price has increased 59.5% in the last 12 months. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ameriprise Financial carries a Zacks Rank #2. For the current year, its Zacks Consensus Estimate was revised 4% upward in the last 60 days. The company’s share price has increased 53.9% in the past year.
T. Rowe Price Group also carries a Zacks Rank #2. The company witnessed an upward earnings estimate revision of 3.4% for the current year, over the last 60 days. Its share price has increased 20.5% in a year’s time.
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Bank Of New York Mellon Corporation (The) (BK) : Free Stock Analysis Report
Carolina Financial Corporation (CARO) : Free Stock Analysis Report
T. Rowe Price Group, Inc. (TROW) : Free Stock Analysis Report
AMERIPRISE FINANCIAL SERVICES, INC. (AMP) : Free Stock Analysis Report
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