Yahoo Finance Results: The Bank of New York Mellon Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates
A week ago, The Bank of New York Mellon Corporation (NYSE:BK) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 6.2% to hit US$4.1b. Bank of New York Mellon reported statutory earnings per share (EPS) US$1.05, which was a notable 17% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Bank of New York Mellon after the latest results.
See our latest analysis for Bank of New York Mellon
Taking into account the latest results, the current consensus, from the 14 analysts covering Bank of New York Mellon, is for revenues of US$15.5b in 2020, which would reflect a noticeable 6.1% reduction in Bank of New York Mellon's sales over the past 12 months. Statutory earnings per share are expected to crater 23% to US$3.58 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$15.0b and earnings per share (EPS) of US$3.50 in 2020. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$42.47, suggesting that the forecast performance does not have a long term impact on the company's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Bank of New York Mellon at US$54.00 per share, while the most bearish prices it at US$38.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Bank of New York Mellon shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Bank of New York Mellon's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 6.1%, a significant reduction from annual growth of 1.5% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.4% next year. It's pretty clear that Bank of New York Mellon's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Bank of New York Mellon's earnings potential next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. The consensus price target held steady at US$42.47, with the latest estimates not enough to have an impact on their price targets.
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..
Plus, you should also learn about the 2 warning signs we've spotted with Bank of New York Mellon (including 1 which is concerning) .
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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