Those who invested in Bank of New York Mellon (NYSE:BK) a year ago are up 32%
We believe investing is smart because history shows that stock markets go higher in the long term. But if you choose that path, you're going to buy some stocks that fall short of the market. Over the last year the The Bank of New York Mellon Corporation (NYSE:BK) share price is up 28%, but that's less than the broader market return. The longer term returns have not been as good, with the stock price only 17% higher than it was three years ago.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
View our latest analysis for Bank of New York Mellon
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During the last year Bank of New York Mellon grew its earnings per share (EPS) by 34%. It's fair to say that the share price gain of 28% did not keep pace with the EPS growth. So it seems like the market has cooled on Bank of New York Mellon, despite the growth. Interesting.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that Bank of New York Mellon has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Bank of New York Mellon's TSR for the last 1 year was 32%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
Bank of New York Mellon's TSR for the year was broadly in line with the market average, at 32%. That gain looks pretty satisfying, and it is even better than the five-year TSR of 5% per year. It is possible that management foresight will bring growth well into the future, even if the share price slows down. It's always interesting to track share price performance over the longer term. But to understand Bank of New York Mellon better, we need to consider many other factors. For example, we've discovered 1 warning sign for Bank of New York Mellon that you should be aware of before investing here.
Of course Bank of New York Mellon may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
