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BNY Mellon (BK) Q3 Earnings: What's in Store for the Stock?

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The Bank of New York Mellon Corporation (BK - Free Report) is scheduled to report third-quarter 2016 results on Oct 20, before the market opens.

Last quarter, BNY Mellon’s adjusted earnings beat the Zacks Consensus Estimate, driven by a dip in costs and provision benefits. However, a marginal decline in top line acted as an undermining factor.

The earnings beat and gradually improving operating environment led to a rise in BNY Mellon’s share price. During the three-month period ended Sep 30, the stock witnessed an increase of around 5%. Further, BNY Mellon has a decent earnings surprise history, as evident from the chart below:

BANK OF NY MELL Price and EPS Surprise


BANK OF NY MELL Price and EPS Surprise | BANK OF NY MELL Quote

Factors Impacting Q3 Results

Will BNY Mellon be able to maintain its earnings streak this quarter? Or will it succumb to the industry challenges? Let’s see how things have shaped up for this earnings release.

On the revenue front, management anticipates net interest revenue to remain flat during the quarter, on a sequential basis. However, non-interest income is likely to be affected by a seasonal slowdown in transaction volumes and market-related revenues, partially offset by the seasonally higher activity in DRs. Therefore, overall revenues should remain stable during the quarter.

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

On the expense front, management expects staff expenses, legal expenses, consulting expenses and real estate & occupancy expenses to likely witness a downtrend. On the other hand, distribution fees related to fee waivers, bank levies, FDIC expense, and regulatory costs are estimated to trend higher. Nonetheless, the company’s overall expenses are anticipated to remain relatively stable.

Earnings Whispers

Our proven model does not conclusively indicate the chances of BNY Mellon beating the Zacks Consensus Estimate this time around, as it does not have the right combination of two key components. Note that a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least #2 (Buy) or #3 (Hold) for significantly higher chances of an earnings beat.

Zacks ESP: The Earnings ESP for BNY Mellon is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 81 cents.

Zacks Rank: BNY Mellon’s Zacks Rank #2 increases the chance of an earnings beat. However, we need to have a positive ESP to be sure of the same.

Notably, BNY Mellon has witnessed four upward revisions in its earnings estimates (versus nil downward revisions) over the last 30 days. Further, the Zacks Consensus Estimate for the third quarter indicates a year-over-year rise of about 9.8%.

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.

State Street Corporation (STT - Free Report) is scheduled to announce results on Oct 26. The company has an Earnings ESP of +0.80% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Raymond James Financial, Inc. (RJF - Free Report) has an Earnings ESP of +2.04% and carries a Zacks Rank #2. The company is slated to release results on Oct 26.

Lazard Ltd. (LAZ - Free Report) has an Earnings ESP of +3.90% and carries a Zacks Rank #2. It is scheduled to report results on Oct 27.

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