Most of the finance companies have delivered better-than-expected results for the quarter ended Sep 30, 2016. As a result, the banking sector as a whole has witnessed a decent price improvement. Further, with higher chances of the Fed raising rates next month, banking stocks are expected to witness a further rise in revenues in the quarters ahead.
One such stock from the sector that reflects strong fundamentals and solid growth prospects is The Bank of New York Mellon Corporation (BK - Free Report) . It has a market capitalization of $50.26 billion and its third-quarter 2016 earnings outpaced the Zacks Consensus Estimate. Notably, it has witnessed an upward earnings estimate revision of 3.6% for the current year over the past 30 days, indicating analysts’ optimism about its growth prospects.
Further, this Zacks Rank #2 (Buy) stock has risen nearly 20.6% for the past six months.
Also, the stock has witnessed an impressive earnings surprise history for the trailing four quarters which is depicted in the chart below:
Further, the company has a number of other aspects that make it an attractive investment option.
Earnings Growth: The company has witnessed EPS growth of 11.5% over the past 3-5 years. Moreover, this earnings momentum is likely to continue in the near term as reflected by the company’s projected EPS growth (F1/F0) of 10.5%.
Also, the company’s long-term (five years) estimated EPS growth rate of 8.5% promises rewards for investors over the long run.
Strong Leverage: BNY Mellon’s debt/equity ratio is 0.69 versus the industry average of 0.90, indicating a relatively lower debt burden. It also indicates the company’s financial stability even in adverse economic conditions.
Effective Cost-Saving Initiatives: BNY Mellon’s cost-saving initiatives have continuously supported profitability. Expenses have experienced a declining trend in the first nine months of 2016. Moreover, the company expects a decline in expenses in 2016 on a year-over-year basis.
Strategic Acquisitions: The company is well positioned to grow through acquisitions. It is constantly trying to invest in attractive businesses and expand its footprint. Moreover, backed by a strong balance-sheet position, the company is likely to benefit in the future.
Impressive Capital Deployment: BNY Mellon’s capital deployment initiatives have remained on track. It got approval for its 2016 capital plan, which includes repurchase of up to $2.14 billion worth shares and a 12% increase in quarterly dividend. As of Sep 30, 2016, the company had approximately $2.24 billion worth shares left under the authorization.
Other Stocks to Consider
Some other favorably placed stocks in the finance space include Farmers Capital Bank Corp. (FFKT - Free Report) , Bank of America Corp. (BAC - Free Report) and Comerica Inc. (CMA - Free Report) .
Farmers Capital witnessed an upward earnings estimate revision of 8.3% for the current year over the past 30 days. Also, its share price is up 22.5% year to date. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bank of America carries a Zacks Rank #2 and has witnessed an upward earnings estimate revision of 9.8% for the current year for the past 30 days. Moreover, its share price is up 19.8% year to date.
Comerica also carries a Zacks Rank #2. It has witnessed an upward earnings estimate revision of 8.8% for the current year for the past 30 days and its share price has surged 43.9% year to date.
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