Earnings Previews: Bank of New York Mellon, Progressive, State Street

The three major U.S. equity indexes closed lower again Tuesday. The Dow Jones industrials closed down 0.6%, the S&P 500 dropped 0.92% and the Nasdaq shed 0.95%. All 11 S&P sectors closed lower. Energy (down 1.9%) and tech (down 1.4%) took the biggest hits. Wednesday morning’s report on the consumer price index (CPI) came in worse than economists had predicted. CPI rose 1.3% month over month and 9.1% year over year. Following the report, all three major indexes traded lower Wednesday morning.

Before markets opened on Tuesday, Delta Air Lines released a mixed report for its second quarter. The airline missed the earnings per share (EPS) estimate but beat on sales. The stock traded up about 0.7% in Wednesday’s premarket.

Fastenal beat estimates on both the top and bottom lines, but the increases were small. Reported EPS was a penny better than estimates, and revenue beat estimates of $1.77 billion by less than $6 million. Shares traded down about 6% in premarket action.

The June-quarter earnings season gets rolling Thursday morning with several notable earnings reports. We already have previewed analysts’ expectations for Conagra, Ericsson, JPMorgan, Morgan Stanley and Taiwan Semiconductor. Meanwhile, Citigroup, UnitedHealth Group, US Bancorp, and Wells Fargo are set to report quarterly early Friday.

Here is a look at three more companies on deck to report quarterly results first thing Friday morning.

Bank of New York Mellon

Bank of New York Mellon Corp. (NYSE: BK) has dropped about 15% from its share price over the past 12 months. Since posting a 52-week high in early February, the share price is down by nearly 34%. The bank named a new chief financial officer earlier this month and brought a new chief executive on board in May. After passing its Federal Reserve stress test last month, the bank will raise its quarterly dividend by 9% to $0.37 per share. Higher interest rates propped up earnings in the first quarter and could do so again for the second quarter.

Of the 18 analysts covering the stock, 11 rate the shares Buy or Strong Buy and the other seven have Hold ratings. The median price target on the stock is $48.00, and at a recent price of around $41.25 the upside potential is around 16.4%. At the high target of $68.00, the potential upside is nearly 65%.

Second-quarter revenue is forecast at $4.17 billion, which would be up 6.3% sequentially and by about 5.3% year over year. Adjusted EPS are expected to come in at $1.11, a jump of 18.2% sequentially and a dip of 1.8% year over year. For the full 2022 fiscal year, analysts currently forecast EPS of $4.34, up 3.9%, on revenue of $16.57 billion, up 4.0%.

The bank’s stock trades at 9.5 times expected 2022 EPS, 8.2 times estimated 2023 earnings of $5.01 and 7.8 times estimated 2024 earnings of $5.27 per share. The stock’s 52-week range is $40.26 to $64.63. Bank of New York Mellon pays an annual dividend of $1.36 (yield of 3.26%). Total shareholder return for the past 12 months was negative 15.5%.

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