Many pundits claim the Ukraine War marks the end of globalization. Many companies could suffer if such claims are true. In particular, BNY Mellon (BK) is an investment bank that relies heavily on services such as foreign exchange, securities lending, treasury services, global collateral services, and outsourcing.
BNY Mellon (NYSE: BK) provides financial services to corporations, institutions, and high-net worth individuals around the world. For example, BNY Mellon is positioning itself to profit from the trend of assets moving into private markets. BNY Mellon forecasts that the level of alliterative assets under management will grow from around 12% in 2022 to around 22% 2026.
I think BNY Mellon’s executives believe private investors, such as family offices, are moving more and more of their money into alternative assets in a changing world. In particular, I think many big investors want to pull out of the stock market to avoid inflation and increasing economic turbulence. Hence, BNY Mellon is examining new markets, such as digital assets.
Will Declining Globalization hurt BNY Mellon?
Falling globalization can hurt BNY Mellon (BK) because its business is moving money and assets between countries and continents. There is some evidence falling globalization harms BNY. In particular, Mellon suffers from low revenue growth rates and revenue shrinkage.
For instance, BNY Mellon’s revenues grew by 0.05% in the quarter ending on 31 March 2022. The revenue growth rate fell from 3.25% in the quarter ending on 31 December 2021 but rose from -17.68% in the quarter ending on 31 March 2021.
Notably, BNY Mellon’s quarterly revenues grew slightly from $4.004 billion on 31 March 2021 to $4.006 billion on 31 March 2022. Hence, it is easy to understand why BNY Mellon’s executives are examining new assets. They see their existing business is capable of little growth.
How Much Money is BNY Mellon (NYSE: BK) making?
Bank of New York Mellon (BK) is making money. BNY Mellon reported a quarterly gross profit of $3.926 billion on 31 March 2022, for instance.
The quarterly gross profit grew slightly from $9.921 billion on 31 March 2021 and fell from $4.015 billion on 31 December 2022. In comparison, the quarterly operating income fell from $1.153 billion on 31 March 2021 to $918 million on 31 March 2022. The quarterly operating income fell from $1.065 billion on 31 December 2021.
However, BNY Mellon is generating more cash. The quarterly operating cash flow rose from -$3.174 billion on 31 March 2021 to $3.429 billion on 31 March 2022. Similarly, the quarterly ending cash flow rose from $9.370 billion on 31 March 2021 to $9.544 billion on 31 March 2022. Interestingly, the quarterly ending cash flow fell to -$1.07 billion on 31 December 2021.
How Much Cash can BNY Mellon (BK) accumulate?
Importantly, BNY Mellon can generate enormous amounts of cash from its financial services. For instance, BNY Mellon reported a quarterly financing cash flow of $30.095 billion on 31 March 2022. The quarterly financing cash flow rose from -$24.127 billion on 31 December 2021.
BNY Mellon had $201.936 billion in cash and short-term investments on 31 March 2022. The cash and short-term investments grew from $200.425 billion on 31 March 2021 and $171.342 billion on 31 December 2021.
In contrast, BNY Mellon had $65.347 billion in total debt on 31 March 2022. The total debt grew from $64.675 billion on 31 March 2021 and $64.857 billion on 31 December 2021.
BNY Mellon’s value is growing. The Total Assets rose from $465.984 billion on 31 March 2021 to $473.811 billion on 31 March 2022. Yet the value growth is slight.
Is BNY Mellon (BK) a value investment?
Many people will wonder if BNY Mellon (NYSE: BK) is a value investment because of its falling stock price.
Notably, BNY Mellon fell from $63.66 on 9 February 2022 to $41.87 on 15 June 2022. In the past year, BNY Mellon fell from $49.64 on 14 June 2021.
I consider BNY Mellon a value investment because it had $473.811 billion in assets but was trading at $41.87 a share. Similarly, BNY Mellon had $201.936 billion in cash and short-term investments on 31 March 2022.
Appealingly, BNY Mellon is a good dividend stock. In fact, BNY Mellon has scheduled eight 34₵ dividends through April 2024. BNY Mellon was delivering a $1.36 forward dividend and a forward dividend yield of 3.25% on 15 June 2022.
If you are seeking a good dividend stock that can make money during a bear market. I think BNY Mellon (BK) is worth examining.
Originally published at https://marketmadhouse.com on June 15, 2022.
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