Bank Of New York Mellon (BK) Marked As A Barbarian At The Gate

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.

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 $292.0 million.
  • BK has traded 1.7 million shares today.
  • BK traded in a range 200.1% of the normal price range with a price range of $1.02.
  • BK traded above its daily resistance level (quality: 7 days, meaning that the stock is crossing a resistance level set by the last 7 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, an investment company, provides financial products and services to institutions, corporations, and high net worth individuals in the United States and internationally. It operates through two segments, Investment Management and Investment Services. The stock currently has a dividend yield of 1.6%. BK has a PE ratio of 19. Currently there are 6 analysts that rate Bank of New York Mellon a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Bank of New York Mellon has been 5.6 million shares per day over the past 30 days. Bank of New York Mellon has a market cap of $48.7 billion and is part of the financial sector and financial services industry. The stock has a beta of 1.23 and a short float of 1.2% with 1.96 days to cover. Shares are up 5.9% year-to-date as of the close of trading on Thursday.

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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 growth in earnings per share, increase in net income, revenue growth, attractive valuation levels and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • BANK OF NEW YORK MELLON CORP has improved earnings per share by 17.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BANK OF NEW YORK MELLON CORP increased its bottom line by earning $2.16 versus $1.74 in the prior year. This year, the market expects an improvement in earnings ($2.68 versus $2.16).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Capital Markets industry average. The net income increased by 15.6% when compared to the same quarter one year prior, going from $674.00 million to $779.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 5.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 27.87% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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