Watch Out: Barbarians At The Gate For Bank Of New York Mellon (BK)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Bank of New York Mellon ( BK) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Bank of New York Mellon as such a stock due to the following factors:

  • BK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $218.3 million.
  • BK has traded 198,981 shares today.
  • BK traded in a range 254.7% of the normal price range with a price range of $1.33.
  • BK traded above its daily resistance level (quality: 3 days, meaning that the stock is crossing a resistance level set by the last 3 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on BK:

The Bank of New York Mellon Corporation provides various financial products and services in the United States and internationally. Its Investment Management segment provides institutional, intermediary, retirement and retail investment management, distribution, and related services. The stock currently has a dividend yield of 1.8%. BK has a PE ratio of 16.9. Currently there are 5 analysts that rate Bank of New York Mellon a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Bank of New York Mellon has been 5.9 million shares per day over the past 30 days. Bank of New York Mellon has a market cap of $44.1 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.45 and a short float of 1.1% with 1.67 days to cover. Shares are up 10.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Bank of New York Mellon as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, reasonable valuation levels, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Compared to its closing price of one year ago, BK's share price has jumped by 26.63%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, BK should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has significantly increased by 92.71% to $3,440.00 million when compared to the same quarter last year. In addition, BANK OF NEW YORK MELLON CORP has also vastly surpassed the industry average cash flow growth rate of -89.21%.
  • The gross profit margin for BANK OF NEW YORK MELLON CORP is currently very high, coming in at 97.92%. Regardless of BK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 15.03% trails the industry average.
  • BANK OF NEW YORK MELLON CORP's earnings per share declined by 32.4% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, BANK OF NEW YORK MELLON CORP reported lower earnings of $1.74 versus $2.05 in the prior year. This year, the market expects an improvement in earnings ($2.39 versus $1.74).

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