Bank Of New York Mellon (NYSE: BK) and Franklin Resources (NYSE:BEN) are both large-cap financials companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, risk, institutional ownership, analyst recommendations, earnings, profitability and dividends.
Insider & Institutional Ownership
82.9% of Bank Of New York Mellon shares are held by institutional investors. Comparatively, 44.7% of Franklin Resources shares are held by institutional investors. 3.6% of Bank Of New York Mellon shares are held by insiders. Comparatively, 22.2% of Franklin Resources shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
This table compares Bank Of New York Mellon and Franklin Resources’ net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
|Bank Of New York Mellon
This is a breakdown of current ratings and recommmendations for Bank Of New York Mellon and Franklin Resources, as reported by MarketBeat.com.
||Strong Buy Ratings
|Bank Of New York Mellon
Bank Of New York Mellon presently has a consensus price target of $56.33, suggesting a potential downside of 3.57%. Franklin Resources has a consensus price target of $43.56, suggesting a potential downside of 2.19%. Given Franklin Resources’ higher probable upside, analysts plainly believe Franklin Resources is more favorable than Bank Of New York Mellon.
Valuation & Earnings
This table compares Bank Of New York Mellon and Franklin Resources’ top-line revenue, earnings per share (EPS) and valuation.
||Earnings Per Share
|Bank Of New York Mellon
Bank Of New York Mellon has higher revenue and earnings than Franklin Resources. Franklin Resources is trading at a lower price-to-earnings ratio than Bank Of New York Mellon, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Bank Of New York Mellon has a beta of 1.22, indicating that its share price is 22% more volatile than the S&P 500. Comparatively, Franklin Resources has a beta of 1.75, indicating that its share price is 75% more volatile than the S&P 500.
Bank Of New York Mellon pays an annual dividend of $0.96 per share and has a dividend yield of 1.6%. Franklin Resources pays an annual dividend of $0.92 per share and has a dividend yield of 2.1%. Bank Of New York Mellon pays out 28.2% of its earnings in the form of a dividend. Franklin Resources pays out 30.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Bank Of New York Mellon has raised its dividend for 5 consecutive years and Franklin Resources has raised its dividend for 36 consecutive years. Franklin Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Franklin Resources beats Bank Of New York Mellon on 9 of the 17 factors compared between the two stocks.
Bank Of New York Mellon Company Profile
The Bank of New York Mellon Corporation is an investments company. The Company operates businesses through two segments: Investment Management and Investment Services. The Company also has an Other segment, which includes the leasing portfolio, corporate treasury activities (including its investment securities portfolio), derivatives and other trading, corporate and bank-owned life insurance and renewable energy investments, and business exits. As of December 31, 2016, the Company had $29.9 trillion in assets under custody and/or administration and $1.6 trillion in assets under management. The Company’s Investment Management boutiques offer a range of actively managed equity, fixed income, alternative and liability-driven investments, along with passive products and cash management. The Company offers asset servicing, clearing services, issuer services and treasury services to its clients.
Franklin Resources Company Profile
Franklin Resources, Inc. is a holding company. The Company, along with its subsidiaries, operates as Franklin Templeton Investments. It is a global investment management company that provides investment management and related services to retail, institutional and high net-worth clients in jurisdictions around the world. The Company offers its investment products and services under the Franklin, Templeton, Franklin Mutual Series, Franklin Bissett, Fiduciary Trust, Darby, Balanced Equity Management, K2 and LibertyShares brand names. Its products include investment funds and institutional, high net-worth and separately managed accounts (collectively, sponsored investment products (SIPs)). It offers various types of SIPs, such as the United States funds, cross-border funds, local/regional funds, and other managed accounts, alternative investment products and trusts. Its investment funds include the United States-registered funds, non-United States-registered funds and unregistered funds.
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