Fundamental Analysis - BNY Melon - Himani (1)

8/11/2019 Fundamental Analysis - BNY Melon - Himani (1)

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2014

SUBMITTED BYHIMANI

CHAUDHARI

ROLL NO.13117, MBA SEMIII, SVIM

8/17/2014

FUNDAMENTAL ANALYSIS OF BNY MELLON

EQUITY RESEARCH


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The Bank of New York Company, Inc. (NYSE: BK) is a global leader in providing a comprehensive

array of services that enable institutions and individuals to move and manage their financial

assets in more than 100 markets worldwide. The Company has a long tradition of collaborating

with clients to deliver innovative solutions through its core competencies: securities servicing,

treasury management, investment management, and individual & regional banking services.

The Companys extensive global client base includes a broad range of leading financial

institutions, corporations, government entities, endowments and foundations. Its principal

subsidiary, The Bank of New York, founded in 1784, is the oldest bank in the United States and

has consistently played a prominent role in the evolution of financial markets worldwide.

The Company has executed a consistent strategy over the past decade by focusing on highly scalable,

fee-based securities servicing and fiduciary businesses, with top three market share in most of its major

product lines. The Company distinguishes itself competitively by offering the broadest array of products

and services around the investment lifecycle. These include: advisory and asset management services to

support the investment decision; extensive trade execution, clearance and settlement capabilities;custody, securities lending, accounting and administrative services for investment portfolios; and

sophisticated risk and performance measurement tools for analyzing portfolios. The Company also

provides services for issuers of both equity and debt securities. By providing integrated solutions for

clients needs, the Company strives to be the preferred partner in helping its clients succeeds in the

worlds rapidly evolving financial markets.


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COMPETITORSOF BNY MELLON

1.Citi Bank

2.Bank of America

3.JP Morgan

4.Wells Fargo

5.US Bancorp

EXTERNAL DRIVERS

Technology And Access to Global Markets

Bank of New York Mellon is a leader in Global securities processing, an investment sector that

grew out of changed legislation and increasing access to the global economy. In the 1980s,

global securities processing became important for a few US banks who were investing increasing

pension fund assets. ERISA (Employees Retirement Income Security Act, 1974) stated that

pension funds could legally invest in non-US assets. Concurrent developments in modern

portfolio theory encouraged pension fund managers to invest globally, thus diversifying their

portfolios.

Thus there was an increased demand for custodians that could collect interest and dividends from

securities traded in any market and denominated in any currency. Changing standards for

securities processing, encouraged by an international committee in 1989 set forth developments

in electronic clearing and easy money policies that simplified and standardized global securities

processing. Moreover, industrial and financial growth in Russia in the 1990s encouraged Global

securities processing. In the 1990s and 2000s, technological advances have allowed for

increasing access to global securities, increasing their viability as investing opportunities. Both

Bank of New York and Mellon Financial were leaders in seeking foreign investments for their

pension funds, with Bank of New York specializing in global securities processing and Mellon

popularizing the Master Trust, or pooled investments to get wholesale rates and prices.
http://www.wikinvest.com/stock/Bank_of_New_York_Mellon_Corporation_(BK)?action=edit&section=5


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BANK OF NEW YORK MELLON GROWTH COMPARISONS

BK Revenue Growth Rate Comparisons Company Industry Sector S&P 500

Y / Y Revenue Growth (Q1 MRQ) 0.59 % -5.15 % -0.34 % 3.23 %

Q / Q Revenue Growth (Q1 MRQ) 1.41 % 2.64 % 1.07 % -3.35 %

Y / Y Revenue Growth (Q1 TTM) 3.59 % -1.17 % -0.23 % %

Seq. Revenue Growth (Q1 TTM) 0.14 % -1.34 % -0.03 % 0.72 %

Revenue 5 Year Average Growth -1.27 % 0.82 % 4.64 % 2.52 %

Expected Revenue Growth (Y/Y) - - 6.76 % 5.56 %

Bank Of New York Mellon managed to grow Revenue by 0.59% year on year, in the first quarter

to 3.73 billions, while Money Center Banks industry fell by -5.15%, Financial sector decreased -

0.34%. Slow first quarter revenue, in Money Center Banks industry and Financial sector, were

portrayed in Bank Of New York Mellon, Corp. results which underperformed overall market.

Comparing company's Revenue to the forth quarter results, revenue were higher by 1.41% . On

the yearly basis, average annual revenue growth for Bank Of New York Mellon is -1.27%, while S

& P 500's including only Businesses with the first quarter Results, average annual revenue

growth is 2.52% over the past five years.
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BK Growth Rates by Company's Segments

Sales & Income Growth Rates Y / Y

Asset Mgmt. 10.98 %

Asset Servicing 4.13 %

Clearing Services 6.91 %

Issuer Services -3.38 %

Treasury Services -3.55 %

Investment Services -1.71 %


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PROFITABILITY

Bank of New York Mellon Profitability Comparisons

BK Profitability RatioCompany Industry Sector S&P 500

Gross Margin 5 Yr. Avg. 95.77 % 85.73 % 56.94 % 38.21 %

EBITDA Margin 5 Yr. Avg. - - 8.28 % 15.88 %

Operating Margin 5 Yr. Avg. - 15.86 % 14.95 % 12.85 %

Pre-Tax Margin 5 Yr. Avg. - 15.86 % 11.22 % 10.66 %

Net Margin 5 Yr. Avg. - 10.68 % 6.55 % 7.48 %

Company's Cash Flow Profitability & Other

Profitability Ratios Company Industry

Sector S&P 500

Free Cash Flow Margin 5 Yr. Avg. - 44.99 % 23.65 % 10.03 %

Net Cash Flow Margin 5 Yr. Avg. - 4.57 % 1.38 % 0.96 %

Effective Tax Rate 5 Yr. Avg. 37.01 % 22.2 % 41.39 % 28.13 %
http://csimarket.com/Industry/industry_Profitability_Ratios.php?ind=708http://csimarket.com/Industry/industry_Profitability_Ratios.php?ind=708http://csimarket.com/Industry/industry_Profitability_Ratios.php?s=700http://csimarket.com/Industry/industry_Profitability_Ratios.phphttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&grohttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&ebithttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&ebithttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&operhttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&operhttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&prehttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&nethttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&nethttp://csimarket.com/Industry/industry_Profitability_Ratiosc.php?ind=708http://csimarket.com/Industry/industry_Profitability_Ratiosc.php?ind=708http://csimarket.com/Industry/industry_Profitability_Ratiosc.php?s=700http://csimarket.com/Industry/industry_Profitability_Ratiosc.phphttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&cfwhttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&cfwhttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&netcfwhttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&netcfwhttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&itxhttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&itxhttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&itxhttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&netcfwhttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&cfwhttp://csimarket.com/Industry/industry_Profitability_Ratiosc.phphttp://csimarket.com/Industry/industry_Profitability_Ratiosc.php?s=700http://csimarket.com/Industry/industry_Profitability_Ratiosc.php?ind=708http://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&nethttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&prehttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&operhttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&ebithttp://csimarket.com/stocks/singleProfitabilityRatiosy.php?code=BK&grohttp://csimarket.com/Industry/industry_Profitability_Ratios.phphttp://csimarket.com/Industry/industry_Profitability_Ratios.php?s=700http://csimarket.com/Industry/industry_Profitability_Ratios.php?ind=708


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VALUATION COMPARISONS

BK ValuationCompany Industry Sector S&P 500

PE Ratio (Q1 TTM) 15 13.4 15.02 18.89

Price to Sales (Q1 TTM) 2.85 2.18 1.72 1.7

Price to Cash Flow (Q1 TTM) 26.49 23.24 94.59 264.46

Price to Book (Q1 MRQ) 1.2 1.05 1.41 2.78

Stock performance to date 23.71 %

Price to earnings ratio Company Ranking

Within: No.

Industry #4

Sector #35

S&P 500 #117

MANAGEMENT EFFECTIVENESS

BK Management EffectivenessCompany Industry Sector S&P 500

Return On Assets (Q1 TTM) 0.81 % 0.78 % 0.88 % 2.99 %

Return On Investment (Q1 TTM) 3.31 % 3.48 % 2.07 % 5.32 %

Return On Equity (Q1 TTM) 8.02 % 7.64 % 9.28 % 14.86 %
http://csimarket.com/Industry/industry_valuation_ttm.php?pe&ind=708http://csimarket.com/Industry/industry_valuation_ttm.php?pe&s=700http://csimarket.com/Industry/industry_valuation_ttm.php?pe&s=700http://csimarket.com/Industry/industry_valuation_ttm.php?pehttp://csimarket.com/Industry/industry_valuation_ttm.php?pehttp://csimarket.com/stocks/single_company_valuation_ttm.php?code=BK&pehttp://csimarket.com/stocks/single_company_valuation_ttm.php?code=BK&pshttp://csimarket.com/stocks/single_company_valuation_ttm.php?code=BK&cfhttp://csimarket.com/stocks/single_company_valuation_ttm.php?code=BK&cfhttp://csimarket.com/stocks/single_company_valuation_ttm.php?code=BK&boohttp://csimarket.com/Industry/industry_ManagementEffectiveness.php?ind=708http://csimarket.com/Industry/industry_ManagementEffectiveness.php?s=700http://csimarket.com/Industry/industry_ManagementEffectiveness.php?s=700http://csimarket.com/Industry/industry_ManagementEffectiveness.phphttp://csimarket.com/Industry/industry_ManagementEffectiveness.phphttp://csimarket.com/stocks/BK-Return-on-Assets-ROA.htmlhttp://csimarket.com/stocks/BK-Return-on-Assets-ROA.htmlhttp://csimarket.com/stocks/BK-Return-on-Investment-ROI.htmlhttp://csimarket.com/stocks/BK-Return-on-Investment-ROI.htmlhttp://csimarket.com/stocks/BK-Return-on-Equity-ROE.htmlhttp://csimarket.com/stocks/BK-Return-on-Equity-ROE.htmlhttp://csimarket.com/stocks/BK-Return-on-Equity-ROE.htmlhttp://csimarket.com/stocks/BK-Return-on-Investment-ROI.htmlhttp://csimarket.com/stocks/BK-Return-on-Assets-ROA.htmlhttp://csimarket.com/Industry/industry_ManagementEffectiveness.phphttp://csimarket.com/Industry/industry_ManagementEffectiveness.php?s=700http://csimarket.com/Industry/industry_ManagementEffectiveness.php?ind=708http://csimarket.com/stocks/single_company_valuation_ttm.php?code=BK&boohttp://csimarket.com/stocks/single_company_valuation_ttm.php?code=BK&cfhttp://csimarket.com/stocks/single_company_valuation_ttm.php?code=BK&pshttp://csimarket.com/stocks/single_company_valuation_ttm.php?code=BK&pehttp://csimarket.com/Industry/industry_valuation_ttm.php?pehttp://csimarket.com/Industry/industry_valuation_ttm.php?pe&s=700http://csimarket.com/Industry/industry_valuation_ttm.php?pe&ind=708


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BNY MELLON NET ASSET

Net Asset is current market value of a fund less its liabilities. In a nutshell, if the fund is

liquidated or the entire asset is sold out, the net asset will be the amount that the shareholderswould demand back from the fund.

BNY MellonNet

Asset=

Current

Market

Value

-Current

Liabilities= 307.22 M

Net Asset is the value used in calculating NAV of a fund. NAV (or Net Asset Value) is computed

once a day based on the formulae that use closing prices of all positions in the fund's portfolio.

Documents

Fundamental Analysis - BNY Melon - Himani (1)