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BNY Mellon (BK) to Report Q2 Earnings: What's in Store?

Zacks Equity Research

The Bank of New York Mellon Corporation BK is scheduled to report second-quarter 2017 results on Jul 20, before the market opens. Its revenues and earnings are expected to grow year over year.

Last quarter, BNY Mellon’s adjusted earnings were in line with the Zacks Consensus Estimate. A rise in revenues and provision benefits were offset by an increase in expenses and, lower foreign exchange and other trading revenues.

The Zacks Consensus Estimate of 84 cents has remained stable over the last seven days in the absence of any estimate revisions.

Also, BNY Mellon does not have a very impressive earnings surprise history. The company delivered positive surprises in only two of the trailing four quarters with an average beat of 2.8%.

Nevertheless, shares of the company has gained 12.6% year to date, outperforming the Zacks categorized Banks - Major Regional industry’s growth of 6%.

Bank Of New York Mellon Corporation (The) Price and EPS Surprise

Bank Of New York Mellon Corporation (The) Price and EPS Surprise | Bank Of New York Mellon Corporation (The) Quote

Earnings Whispers

Before delving deeper into the factors that are likely to influence the results, let’s check what our quantitative model predicts.

Our proven model doesn’t conclusively predict if BNY Mellon will be able to beat the Zacks Consensus Estimate this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #3 (Hold) or better for this to happen.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter

Zacks ESP: The Earnings ESP for BNY Mellon is 0.00%. This is because the Most Accurate estimate of 84 cents is in line with the Zacks Consensus Estimate.

Zacks Rank: BNY Mellon has a Zacks Rank #3, which increases the predictive power of ESP. However, we also need to have a positive Earnings ESP to be confident of an earnings beat.

Factors to Influence Q2 Results

We believe that the Mar 2017 rate hike should have had a positive impact on BNY Mellon’s margin in the second quarter. Moreover, management was of the opinion that any future rate hikes will lead to further improvement in margin. Based on this expectation, we believe the June rate hike to have a slight positive impact on margin in the quarter.

The company believes that improving margins will more than offset the impact of reduced size of balance sheet, thus a modest increase in net interest revenue is expected in the to-be-reported quarter. Notably, the company expects NIR to increase nearly 2–4% on a sequential basis.

On the expense front, management expects legal and professional expenses to be slightly higher in the quarter due to ongoing compliance costs. However, total costs are expected to remain flat on a year-over-year basis.

Stocks That Warrant a Look

Here are a few finance stocks that you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases.

Citizens Financial Group, Inc. CFG is slated to report second-quarter results on Jul 21. It has an Earnings ESP of +1.70% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Fifth Third Bancorp’s FITB Earnings ESP is +2.38% and it carries a Zacks Rank #3. The company is expected to release second-quarter results on Jul 21.

Huntington Bancshares Incorporated HBAN has an Earnings ESP of +4.35% and a Zacks Rank #3. It is scheduled to report second-quarter results on Jul 21.

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