When Should You Buy The Bank of New York Mellon Corporation (NYSE:BK)?

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The Bank of New York Mellon Corporation (NYSE:BK) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $53.44 at one point, and dropping to the lows of $42.69. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Bank of New York Mellon's current trading price of $43.4 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Bank of New York Mellon’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Bank of New York Mellon

Is Bank of New York Mellon still cheap?

According to my valuation model, Bank of New York Mellon seems to be fairly priced at around 5.3% above my intrinsic value, which means if you buy Bank of New York Mellon today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $41.22, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Bank of New York Mellon’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Bank of New York Mellon?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Bank of New York Mellon, it is expected to deliver a negative earnings growth of -1.5%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? BK seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on BK for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on BK should the price fluctuate below its true value.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Bank of New York Mellon. You can find everything you need to know about Bank of New York Mellon in the latest infographic research report. If you are no longer interested in Bank of New York Mellon, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.