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BNY Mellon (BK) Q1 Earnings: What's in Store for the Stock?

The Bank of New York Mellon Corporation BK is scheduled to announce first-quarter 2016 results on Apr 21, before the market opens.

Last quarter, BNY Mellon’s adjusted earnings came well ahead of the Zacks Consensus Estimate, driven by a dip in costs and an improvement in the top line. However, deterioration in provision for loan losses acted as an undermining factor.

Further, BNY Mellon has a decent earnings surprise history. The company has surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average positive surprise of 10.18%.


So, will BNY Mellon be able to maintain its earnings streak this quarter? Or will it succumb to the industry challenges?

Let us see what our model indicates:

BNY Mellon doesn’t have right combination of two main ingredients – positive Earnings ESP and a Zacks Rank #3 (Hold) or better – for this to happen.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 68 cents.

Zacks Rank: BNY Mellon carries a Zacks Rank #3 (Hold). However, we need to have a positive earnings ESP to be sure of the earnings beat.

Factors Impacting Q1 Results

Starting with expenses, management expects bank assessment charges to witness a rise of $15 million during the first quarter, while staff expense is anticipated to increase due to seasonal acceleration of long-term incentive compensation expense for retirement-eligible employees. Nonetheless, the company’s overall expenses will remain relatively stable on a year-over-year basis.

On the revenue front, management anticipates a modest sequential increase in net interest income and net interest margin in the first quarter. The company expects issuer-services fees to be under pressure during the quarter owing to the runoff of higher-margin structured-debt securities.

Also, a strengthening U.S. dollar is expected to impact Investment Management revenues owing to its international presence. However, the impact of the same will be insignificant on the company’s overall financials.

BNY Mellon’s activities during the quarter failed to win analysts’ confidence. Hence, the Zacks Consensus Estimate for the quarter remained stable at 68 cents per share over the last 7 days.

Stocks That Warrant a Look

Here are a few finance stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

People's United Financial Inc. PBCT has an Earnings ESP of +4.76% and carries a Zacks Rank #3. It is scheduled to report results on Apr 21.

Affiliated Managers Group Inc. AMG has an Earnings ESP of +0.68% and a Zacks Rank #2 (Buy). The company is expected to report results on Apr 26.

State Street Corporation STT has an Earnings ESP of +1.15% and a Zacks Rank #3. It is scheduled to report on Apr 27.

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BANK OF NY MELL (BK): Free Stock Analysis Report
 
STATE ST CORP (STT): Free Stock Analysis Report
 
AFFIL MANAGERS (AMG): Free Stock Analysis Report
 
PEOPLES UTD FIN (PBCT): Free Stock Analysis Report
 
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