Can BNY Mellon’s Recent 49% Rally Continue After Latest Digital Asset Expansion?

Thinking about what to do with Bank of New York Mellon stock? You’re not alone. Whether you’re holding, buying, or just tracking for a potential move, this is one name that’s drawn plenty of attention lately. After a strong multi-year run, with the share price up 49.5% over the past year and an incredible 236.1% over the last five years, many investors are asking if there’s still room to grow or if the best gains are already behind us.

The stock’s jump has come alongside a broader rally in financials and a shift in how the market views risk within global banking. In the last 30 days, BN Mellon managed to edge higher by 3.1%, even as shorter-term swings saw it slip by 1.9% over the past week. Year-to-date, returns clocked in at a robust 38.1%, indicating that optimism and momentum are hardly in short supply. The company’s ability to navigate shifting banking trends, from digital asset management to changing global regulations, helps explain some of this renewed confidence from investors.

Of course, price movement is only one piece of the story. Valuation really matters. According to our six-point checklist for undervalued stocks, Bank of New York Mellon meets three criteria, giving it a value score of 3. That’s not bad, but does it go far enough to call these shares a bargain, or is there something the numbers are missing? Let’s dive into the different ways investors look at valuation and, just as importantly, explore a better approach to deciding what’s fair value for this stock.

Bank of New York Mellon delivered 49.5% returns over the last year. See how this stacks up to the rest of the Capital Markets industry.

Approach 1: Bank of New York Mellon Excess Returns Analysis

The Excess Returns model measures a company’s ability to generate returns above its cost of equity capital, focusing on how efficiently Bank of New York Mellon converts investor funds into profits that exceed baseline expectations. This approach emphasizes return on invested capital and sustainable growth rather than just earnings or book value.

Bank of New York Mellon’s financials reveal a Book Value of $54.76 per share and a Stable EPS of $8.31 per share, based on weighted future Return on Equity estimates from ten analysts. The average Return on Equity is a solid 13.78%, with the Cost of Equity estimated at $5.93 per share. That results in an Excess Return of $2.38 per share, demonstrating the company’s ability to generate value above its cost of capital. Looking ahead, the Stable Book Value is forecast at $60.36 per share, according to projections from eight analysts.

Taking all these factors into account, the Excess Returns method estimates the intrinsic value of Bank of New York Mellon shares at $95.71. Since the model suggests the stock is currently 11.7% overvalued, the market appears to have bid up shares beyond their fair value based on future profit potential.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Bank of New York Mellon.

Our Excess Returns analysis suggests Bank of New York Mellon may be overvalued by 11.7%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Bank of New York Mellon Price vs Earnings

The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics for profitable companies because it connects a company’s share price to its earnings power. For a business with solid, consistent profits like Bank of New York Mellon, the PE ratio provides a straightforward way to gauge market expectations relative to actual performance.

It is important to note that what counts as a "normal" or "fair" PE ratio can shift due to growth prospects and risk. Companies with higher expected earnings growth often deserve a higher PE, while those seen as riskier or stagnating command a discount. For Bank of New York Mellon, the current PE stands at 15.8x, which is below the Capital Markets industry average of 25.5x and well below the peer average of 33.4x. This suggests the market is pricing the company more conservatively than many of its competitors.

Simply Wall St’s Fair Ratio is designed to set a more precise benchmark by factoring in the company’s growth outlook, profit margins, risk profile, size, and its role within the industry. Unlike a simple comparison to industry or peer averages, the Fair Ratio delivers a more individualized assessment. For Bank of New York Mellon, the Fair Ratio is calculated at 18.0x. Given that the company’s current PE is 15.8x, just shy of the Fair Ratio, this indicates that the shares are trading right in line with their fair value based on these deeper fundamentals.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Bank of New York Mellon Narrative

Earlier, we mentioned there is an even better way to understand valuation. Let’s introduce you to Narratives, a smarter, more dynamic tool that lets you connect the story behind a company with your financial expectations. A Narrative is simply your unique perspective about where Bank of New York Mellon is headed, including your assumptions for future revenue, profit margins, and what you see as fair value. All of these elements are linked together into a living investment story.

On the Simply Wall St Community page, millions of investors use Narratives to frame their analysis and compare outlooks by tracking how the Bank of New York Mellon story, financial forecast, and fair value change over time. Narratives help you spot opportunity or caution by instantly showing the gap (or overlap) between Fair Value and the current Price, making buy, hold, or sell calls more logical and fact-based.

Most importantly, Narratives are always evolving. Each one updates automatically when new data, earnings releases, or major news impacts the story. For example, some investors see Bank of New York Mellon’s embrace of digital assets and ESG trends as justification for a bullish fair value of $113.00 per share, while others focus on deposit risks and fee pressure, estimating a more conservative $85.00. This underscores how your Narrative empowers decisions grounded in your personal market view.

Do you think there's more to the story for Bank of New York Mellon? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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