Will Strong Market Momentum Help Bank Of New York Mellon Stock Beat Earnings?

Core Insights - Bank of New York Mellon (BNY) is expected to report earnings of approximately $1.75 per share, reflecting a 16% increase year-over-year, with revenues anticipated to grow by nearly 5% [2] - The growth is driven by an increase in assets under custody and administration, which surpassed $53 trillion, alongside cost reductions and a focus on higher-margin businesses [2] - Revenue from fees is projected to rise due to recent market developments and the acquisition of new clients, with a noted correlation between equity market shifts and fee income [2] Financial Performance - BNY currently has a market capitalization of $67 billion, with revenue of $19 billion and net income of $4.7 billion over the last twelve months [3] - The bank's fee income is sensitive to market performance, with a 5% shift in equity markets corresponding to approximately $70 million in fees [2] Earnings Reaction History - Over the past five years, BNY has recorded 20 earnings data points, with 12 positive and 8 negative one-day post-earnings returns, resulting in a 60% positive return rate [5] - This positive return rate increases to 83% when considering the last three years [5] - The median positive return is 3.9%, while the median negative return is -2.1% [5] Correlation Analysis - A strategy to evaluate the correlation between short-term and medium-term returns post-earnings can be employed, particularly focusing on pairs with strong correlations [6] - The correlation between one-day and five-day returns is highlighted as a potential trading strategy [6]