Bank of New York Mellon Vs. State Street: The Underperformer May Be The Better Buy

Joseph E. Jones
697 Followers
(13min)

Summary

  • BNY Mellon's strengths include significant income on sweep balances, a broader service mix, and recent efficiency gains through automation.
  • State Street is seeing margin expansion from the scaling of its Alpha platform and improved inflows into its ETF products.
  • While BK's premium valuation is justified by stronger margins, high ROTCE, and aggressive capital return, near-term upside appears limited.
  • STT is trading below its historical P/E and dividend yield averages and may currently offer the more attractive entry point.

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Bet_Noire

Since my previous article on Bank of New York Mellon (NYSE:BK) in December, shares have added another 8% bringing the 12-month gain to nearly 50%. That run reflects improving margins, steady fee growth, and aggressive capital return amidst a volatile macro environment. But

This article was written by

697 Followers
Joseph Jones, professor at The University of Southern Mississippi, has over fifteen years of experience studying the market. He focuses on portfolio construction from a dividend growth investor's perspective. The insights expressed in his research are solely his own; they do not represent the views or financial interests of his employer.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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