This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Custody Banks: Financial Losers

NEW YORK ( TheStreet) -- Bank of New York Mellon (BK - Get Report) and State Street (STT - Get Report) were the losers among major U.S. financial names on Wednesday, with shares of both custody banks sliding over 3%.

Shares of Bank of New York Mellon closed at $20.57 and State Street closed at $39.91.

The broad indexes saw 1% gains after Apple's (AAPL) blowout quarter.

The The KBW Bank Index (I:BKX) rose slightly, to close at 43.53, after the Federal Reserve Open Market Committee issued a statement indicating that it would keep the federal funds rate near zero "at least through late 2014."

After Bank of New York Mellon last Wednesday announced fourth-quarter earnings of $505 million, or 42 cents a share, declining from $54 cents a share in the third quarter and 53 cents a share during the fourth quarter of 2010, Guggenheim Securities analyst Marty Mosby reiterated his "Buy" rating on the company's shares, saying that the "results reflected the full impact from this low interest rate environment and the preference of investors to de-risk their positions."

Mosby added that "The inability to continue to grow earnings in this operating environment has pushed BK's price to earnings ratio to historically low levels" to forward earnings estimates, but that he expected "efficiency initiatives, a stable net interest margin, an acceleration in share repurchases, and a return of investor confidence to help produce at least 10% EPS growth in 2012."

The analyst also believes that after the Federal Reserve completes its latest round of stress tests in March, Bank of New York could raise its dividend yield to 3.5%.

The shares trade for nine times the consensus 2012 earnings estimate of $2.26 a share, among analysts polled by FactSet.

Interested in more on Bank of New York Mellon? See TheStreet Ratings' report card for this stock.

Following State Street's announcement on Monday of fourth-quarter operating earnings of 93 cents a share, declining from 96 cents during the third quarter and a dollar during the fourth quarter of 2010, Marty Mosby reiterated his "Buy" rating for the stock, saying that he believes "that as the operating environment stabilizes in 2012 , revenue growth returns, positive efficiencies begin to build, and share repurchases continued to lower outstanding shares, STT should be able to grow operating earnings per share by at least 10%."

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
BK $42.92 0.04%
HCBK $9.45 0.21%
STT $78.25 -0.63%
AAPL $124.52 -1.00%
FB $77.28 -0.36%

Markets

DOW 17,864.81 -63.39 -0.35%
S&P 500 2,095.34 +5.88 0.28%
NASDAQ 4,954.0020 +14.6750 0.30%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs