Analyzing Bank Of New York Mellon Corporation (The) (BK) and Northern Trust Corporation (NTRS)

Bank Of New York Mellon Corporation (The) (NYSE: BK) and Northern Trust Corporation (NASDAQ:NTRS) are both large-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, institutional ownership, risk, earnings, profitability, valuation and analyst recommendations.

Dividends

Bank Of New York Mellon Corporation (The) pays an annual dividend of $0.96 per share and has a dividend yield of 1.8%. Northern Trust Corporation pays an annual dividend of $1.68 per share and has a dividend yield of 1.8%. Bank Of New York Mellon Corporation (The) pays out 28.1% of its earnings in the form of a dividend. Northern Trust Corporation pays out 37.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Northern Trust Corporation has raised its dividend for 4 consecutive years. Bank Of New York Mellon Corporation (The) is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Bank Of New York Mellon Corporation (The) and Northern Trust Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Bank Of New York Mellon Corporation (The) $15.67 billion 3.43 $3.55 billion $3.42 15.34
Northern Trust Corporation $5.14 billion 4.16 $1.03 billion $4.52 20.81

Bank Of New York Mellon Corporation (The) has higher revenue and earnings than Northern Trust Corporation. Bank Of New York Mellon Corporation (The) is trading at a lower price-to-earnings ratio than Northern Trust Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Bank Of New York Mellon Corporation (The) and Northern Trust Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bank Of New York Mellon Corporation (The) 2 9 4 1 2.25
Northern Trust Corporation 1 7 3 1 2.33

Bank Of New York Mellon Corporation (The) currently has a consensus price target of $54.88, indicating a potential upside of 4.58%. Northern Trust Corporation has a consensus price target of $95.00, indicating a potential upside of 0.99%. Given Bank Of New York Mellon Corporation (The)’s higher possible upside, research analysts clearly believe Bank Of New York Mellon Corporation (The) is more favorable than Northern Trust Corporation.

Profitability

This table compares Bank Of New York Mellon Corporation (The) and Northern Trust Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bank Of New York Mellon Corporation (The) 23.14% 10.51% 1.11%
Northern Trust Corporation 20.27% 12.33% 0.89%

Institutional & Insider Ownership

82.7% of Bank Of New York Mellon Corporation (The) shares are owned by institutional investors. Comparatively, 82.0% of Northern Trust Corporation shares are owned by institutional investors. 3.6% of Bank Of New York Mellon Corporation (The) shares are owned by company insiders. Comparatively, 1.3% of Northern Trust Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Volatility & Risk

Bank Of New York Mellon Corporation (The) has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500. Comparatively, Northern Trust Corporation has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500.

Summary

Bank Of New York Mellon Corporation (The) beats Northern Trust Corporation on 11 of the 17 factors compared between the two stocks.

Bank Of New York Mellon Corporation (The) Company Profile

The Bank of New York Mellon Corporation is an investments company. The Company operates businesses through two segments: Investment Management and Investment Services. The Company also has an Other segment, which includes the leasing portfolio, corporate treasury activities (including its investment securities portfolio), derivatives and other trading, corporate and bank-owned life insurance and renewable energy investments, and business exits. As of December 31, 2016, the Company had $29.9 trillion in assets under custody and/or administration and $1.6 trillion in assets under management. The Company’s Investment Management boutiques offer a range of actively managed equity, fixed income, alternative and liability-driven investments, along with passive products and cash management. The Company offers asset servicing, clearing services, issuer services and treasury services to its clients.

Northern Trust Corporation Company Profile

Northern Trust Corporation is a financial holding company. The Company provides asset servicing, fund administration, asset management, fiduciary and banking solutions for corporations, institutions, families and individuals across the world. Its segments include Corporate & Institutional Services (C&IS), Wealth Management, and Treasury and Other. The C&IS segment is a provider of asset servicing and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds and other institutional investors around the globe. The Wealth Management segment provides trust, investment management, custody and philanthropic services; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services, and private and business banking. It conducts its business through various subsidiaries.

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