Is It Time To Reassess Bank of New York Mellon Corporation (BK) After Recent Price Pullback?

• If you are wondering whether Bank of New York Mellon Corporation stock still offers value at current levels, this article will help you weigh what the market price might be implying about the business.
• BNY recently closed at US$117.74, with returns of a 5.3% decline over the last 7 days, a 5.5% decline over 30 days, a 0.6% gain year to date, 36.9% over 1 year, 148.5% over 3 years and 220.4% over 5 years. These figures may prompt you to reassess the balance between opportunity and risk.
• Recent headlines around BNY have focused on its position in global custody, asset servicing and broader capital markets activity. This gives investors more information to interpret these price moves. For long term shareholders and new investors alike, this context helps frame whether the current share price aligns with how the market is viewing the bank's role in these areas.
• Our Simply Wall St valuation checks give Bank of New York Mellon Corporation a 4 out of 6 valuation score. Next we will compare different valuation approaches to see what they suggest about the stock, before finishing with a way to look beyond the numbers and understand valuation in a fuller context.

Bank of New York Mellon delivered 36.9% returns over the last year. See how this stacks up to the rest of the Capital Markets industry.

Approach 1: Bank of New York Mellon Excess Returns Analysis

The Excess Returns model looks at how much profit a company is expected to generate above the return that shareholders require, and then capitalizes those extra earnings into a per share value.

For Bank of New York Mellon Corporation, the model starts with a Book Value of US$57.36 per share and a Stable EPS estimate of US$9.54 per share, based on weighted future Return on Equity estimates from 8 analysts. The implied Average Return on Equity is 14.70%, while the Cost of Equity is US$6.06 per share. That gap produces an Excess Return of US$3.49 per share, which is what this model treats as value created above the required return.

The analysis also uses a Stable Book Value of US$64.91 per share, drawn from weighted future Book Value estimates from 8 analysts. Combining these inputs, the Excess Returns model arrives at an intrinsic value of about US$123.81 per share.

Against the recent share price of US$117.74, this implies the stock is around 4.9% undervalued, which sits in the “close to fair value” range.

Result: ABOUT RIGHT

Bank of New York Mellon is fairly valued according to our Excess Returns, but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Bank of New York Mellon.

Approach 2: Bank of New York Mellon Price vs Earnings

For a profitable company like Bank of New York Mellon Corporation, the P/E ratio is a useful way to relate what you pay for each share to the earnings that each share currently generates. It gives you a quick sense of how the market is pricing those earnings today.

What counts as a “normal” or “fair” P/E depends on how the market views growth potential and risk. Higher expected earnings growth or lower perceived risk often line up with higher P/E ratios, while lower growth expectations or higher risk usually come with lower P/E ratios.

BNY currently trades on a P/E of 15.27x. That sits below both the Capital Markets industry average P/E of 23.12x and the peer group average of 23.75x. Simply Wall St also calculates a “Fair Ratio” of 16.88x for BNY, which is the P/E level it would typically expect given factors like the company’s earnings profile, industry, profit margin, market cap and risk characteristics. This Fair Ratio can be more informative than a simple peer or industry comparison because it is tailored to BNY’s own fundamentals rather than broad group averages. Set against the current P/E of 15.27x, the Fair Ratio of 16.88x suggests the shares trade at a discount to that company specific benchmark.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 23 top founder-led companies.

Upgrade Your Decision Making: Choose your Bank of New York Mellon Narrative

Earlier we mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you connect your view of Bank of New York Mellon Corporation’s story to a financial forecast and a fair value. This is done by turning your assumptions about future revenue, earnings and margins into a clear fair value that you can compare with today’s price. It updates automatically when fresh news or earnings arrive. Your Narrative also sits alongside other investors’ Narratives on the Community page. You can then see, for example, how someone using a higher fair value of US$132.60 and stronger expectations around AI and stablecoin initiatives might reach a different conclusion to another investor who anchors on the lowest analyst price target of US$85.00 and focuses more on risks such as fee pressure and digital disruption.

Do you think there's more to the story for Bank of New York Mellon? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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