The Bank of New York Mellon Corporation (NYSE:BK) typically isn’t one of the first big banks investors think of when they decide to plunk some of their hard-earned cash into financial stocks, but maybe it should be. It puts up some great numbers and operates in about as conservative a fashion as you could hope for — so not only do you get great returns, your money is also safe.
Without further ado, then, here are seven easy-to-digest metrics that will help you get you started with one of my favorite big banks.
1. Great 2012 share-price performance
Those smarties who owned The Bank of New York Mellon Corporation (NYSE:BK) shares at the start of 2012 and held onto them until the end were rewarded with a gain of 25.30%. Not too shabby. No, it’s not Bank of America Corp (NYSE:BAC), which rewarded its shareholders with a gain of 100.17% in 2012, but The Bank of New York Mellon Corporation (NYSE:BK)’s performance comes with a lot fewer catches. More on that below.
2. Great 2013 share-price performance
The Bank of New York Mellon Corporation (NYSE:BK) shareholders are off to a strong start for 2013, with a year-to-date gain of 6.10%. B of A shareholders can only dream of a return like that this year; they’ve only seen a gain of 0.33% so far.
3. Attractive valuation
BoNY’s price-to-book ratio is 0.94, which is right in the pocket. A P/B of 0.94 tells me the bank is a bit undervalued, but not too much — not enough to raise any red flags. The idea here is, buy with a P/B of right around 1, and sell when and if P/B reaches 2.0.
B of A’s P/B is 0.60. That’s the kind of number — especially post subprime-lending boom — that raises red flags for me.
4. Great fourth-quarter performance
BoNY grew its 2012 Q4 earnings by 25.70% year over year, on revenue growth of just 4.6%. Now that’s bang for your banking buck. This is very comparable to Citigroup Inc. (NYSE:C)‘s fourth-quarter performance: a 25.10% increase on net earnings on 5% earning’s growth. Citi is another big bank that’s underrated as an investment.