Barrons Says BNY Mellon (BK) Is An Attractive Buy
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In this week's Barrons there was a positive article on BNY Mellon (NYSE: BK). Barrons said BNY Mellon is an attractive play on rising global wealth and the development of securities markets worldwide. Barrons also likes that BNY Mellon has little exposure to the subprime markets.
BNY Mellon trades at a reasonable 16 times expected 2008 earnings, a valuation that doesn't reflect the company's likely merger efficiencies (Bank of New York and Mellon merger) or long-term prospects. BK should rise at a faster pace than its 15% annual earnings-growth pace, as investors more fully understand the virtues of BNY Mellon's scale and efficiency.
Barrons noted: "The other U.S. banking outfits that, with BNY Mellon, make up the asset-servicing oligopoly -- State Street (NYSE: STT) and Northern Trust (Nasdaq: NTRS) -- trade at multiples of 16 and 19 on 2008 profits, respectively. BNY Mellon, at $55 billion in stock-market value, is twice as large as those firms and has a more lucrative asset-management fee stream, the source of 30% of its profits. Pure-play asset managers routinely trade for 20 times earnings, suggesting that the rest of BNY Mellon is being valued well under 15 times."
BNY Mellon CEO Robert Kelly says that while, at first glance, his stock might appear fairly valued versus State Street's and Northern Trust's, the rapid growth of his company's asset-management and non-U.S. profits don't seem to be reflected in the price. "In five years," Kelly observes, "we could be closer to 50% asset management and close to 50% international," up from 30% for each right now. "There is $140 trillion of fixed-income and equity assets on the planet, and we have $21 trillion of it," under management or in custody.
To sum up, Barrons says investors are valuing BNY Mellon below its two biggest rivals. When investors fully understand BNY Mellon's virtues, the stock will rise by over 15% annually.
BNY Mellon trades at a reasonable 16 times expected 2008 earnings, a valuation that doesn't reflect the company's likely merger efficiencies (Bank of New York and Mellon merger) or long-term prospects. BK should rise at a faster pace than its 15% annual earnings-growth pace, as investors more fully understand the virtues of BNY Mellon's scale and efficiency.
Barrons noted: "The other U.S. banking outfits that, with BNY Mellon, make up the asset-servicing oligopoly -- State Street (NYSE: STT) and Northern Trust (Nasdaq: NTRS) -- trade at multiples of 16 and 19 on 2008 profits, respectively. BNY Mellon, at $55 billion in stock-market value, is twice as large as those firms and has a more lucrative asset-management fee stream, the source of 30% of its profits. Pure-play asset managers routinely trade for 20 times earnings, suggesting that the rest of BNY Mellon is being valued well under 15 times."
BNY Mellon CEO Robert Kelly says that while, at first glance, his stock might appear fairly valued versus State Street's and Northern Trust's, the rapid growth of his company's asset-management and non-U.S. profits don't seem to be reflected in the price. "In five years," Kelly observes, "we could be closer to 50% asset management and close to 50% international," up from 30% for each right now. "There is $140 trillion of fixed-income and equity assets on the planet, and we have $21 trillion of it," under management or in custody.
To sum up, Barrons says investors are valuing BNY Mellon below its two biggest rivals. When investors fully understand BNY Mellon's virtues, the stock will rise by over 15% annually.
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