The Bank of New York Mellon Corporation (NYSE:BK) shares fell 8.6% to US$46.18 in the week since its latest full-year results. Results overall were respectable, with statutory earnings of US$4.51 per share roughly in line with what analysts had forecast. Revenues of US$16b came in 4.2% ahead of analyst predictions. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the twelve analysts covering Bank of New York Mellon provided consensus estimates of US$15.8b revenue in 2020, which would reflect a discernible 4.3% decline on its sales over the past 12 months. Statutory earnings per share are expected to reduce 8.7% to US$4.15 in the same period. In the lead-up to this report, analysts had been modelling revenues of US$15.9b and earnings per share (EPS) of US$4.27 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.
The consensus price target held steady at US$53.14, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Bank of New York Mellon, with the most bullish analyst valuing it at US$63.00 and the most bearish at US$47.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Further, we can compare these estimates to past performance, and see how Bank of New York Mellon forecasts compare to the wider market's forecast performance. These estimates imply that sales are expected to slow, with a forecast revenue decline of 4.3% a significant reduction from annual growth of 1.1% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 5.1% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Bank of New York Mellon to grow slower than the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Bank of New York Mellon. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Bank of New York Mellon going out to 2022, and you can see them free on our platform here..
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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