Bank Of New York Mellon Reports EPS Just Above Estimates

Argus provided its analysis on Bank of New York Mellon Corp

following the second quarter earnings release. On July 21, Bank of New York Mellon posted adjusted 2Q16 EPS of $0.76, down from $0.77 a year earlier but $0.01 above the consensus estimate. The analysts don't believe multiple expansion will occur, given the cost cutting and share buybacks are the primary earnings drivers. "In the high $30s, the stock is trading at 12.6-times our revised 2016 EPS forecast. While not this is not an expensive valuation by historical standards, we are concerned about the current adverse environment for revenue growth and reliance on cost cutting and share buybacks for earnings growth." wrote Argus. The analysts forecast limited P/E expansion until stronger growth materializes. Moreover, they believe investors have already factored in the positive impact of the company's efficiency improvement efforts. The company maintained its Hold rating on the shares, stating that it would reconsider raising it in the event of a nonfundamental pullback in share price or a better revenue growth environment.