Which Stock will give you a Nice Return? Bank Of New York Mellon Corporation (The) (BK) or Alcoa Corporation (AA)

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The shares of Bank Of New York Mellon Corporation (The) (NYSE:BK) and Alcoa Corporation (NYSE:AA) were among the active stocks of the last trading sessions. Bank Of New York Mellon Corporation (The) (NYSE:BK) declined to -0.17% closing at the price of $52.59 whereas the shares of Alcoa Corporation (NYSE:AA) declined -2.44% with the decrease of -1.05 points closing at the price of $42.06. Bank Of New York Mellon Corporation (The) has currently increase 4.1% in its stock over the period of 6-months while its rival Alcoa Corporation subtracted -16.91% in the previous 6-months.

Now we have to analyze the facts that if the stocks were worthy off investors’ money? The facts to analyze here are risks, profitability, returns and price trends.

Returns and Profitability

Profitability and returns are the main reason of investment, the investors are looking for profits that they get and return they should expect over the period of time.

The first and foremost return that is considered while making an investment is the ROI or Return on Investment. The ROI is the ratio between the profit against the cost of investment. Currently the ROI of Bank Of New York Mellon Corporation (The) (NYSE:BK) is 3.2% while the ROI of Alcoa Corporation (NYSE:AA) is 10.6%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, BK’s EBITDA Margin is NOT AVAILABLE whereas AA’s is 3.9.

Both the profitability ratios suggest a mixed sentiment for Bank Of New York Mellon Corporation (The) (NYSE:BK) and Alcoa Corporation (NYSE:AA).

EPS & Surprise Factor

Bank Of New York Mellon Corporation (The) (NYSE:BK) reported $1.03/share EPS for the previous quarter where analysts were predicting an EPS to be $1.02/share Thus beating the analyst Estimates with a Surprise Factor of 1 Percent. While, Alcoa Corporation (NYSE:AA) reported EPS of $1.52/share in the last quarter. The analysts projected EPS of $1.32/share depicting a Surprise of 15.2 Percent.

Taking a look at Earnings per Share, Alcoa Corporation tends to be beating the analyst estimates more than Bank Of New York Mellon Corporation (The). so AA is more profitable than BK.

Technical Analysis of Bank Of New York Mellon Corporation (The) & Alcoa Corporation

Moving average convergence divergence (MACD) shows that Bank Of New York Mellon Corporation (The) (NYSE:BK) is on a PRICE RELATIVITY trend While Alcoa Corporation (NYSE:AA) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Bank Of New York Mellon Corporation (The) was in BULLISH territory and Alcoa Corporation was in BULLISH territory.

BK’s current statistics gauge that the stock candle is BEARISH with MEDIUM volatility. While AA’s candle is BEARISH with HIGH.

EPS Growth Rate: BK’s 9.19% versus AA’s 3.5%

Another shareholder value can be analyzed through the EPS growth rate; the next 5 years EPS growth rate is predicted by the analysts after the analyzing the previous trends. The next 5 year EPS growth rate of Bank Of New York Mellon Corporation (The) (NYSE:BK) is predicted at 9.19% while Alcoa Corporation (NYSE:AA) stands at 3.5%. These numbers suggest that BK is more suitable investment in terms of EPS growth rate.

Financial Risk and Liquidity Concerns

The current ratio and the debt ratio are the two ratios that show the investor how quickly the company is able to payout its debt and how quickly it can cover its obligations. The current ratio of BK stands at 0 while AA is at 1.4 whereas the debt ratio of the prior is 0.74 while the debt ratio of the later is 0.38.

The values of the both ratios suggest that one is more liquid and other investment is more risk free.

Analyst Recommendations

While making an investment, another main factor to consider before investing is the analyst recommendation on the scale of 1 to 5 where 1 is strong buy, 2 is buy, 3 is hold, 4 is Sell and 5 is strong sell. Analyst recommend 2.8 for BK and 2.1 for AA which means BK has Hold rating whereas AA has Hold rating.

Another recommendation of analyst that is to be considered worthy is the price target. The mare price or price trend does not suggest the suitability of a stock. The price target set by analyst is also to be considered while investing as it suggests to what extent the stock will rise or fall in the near future. The price target set for BK is $59.53 which is 11.66% of its current price while AA has price target of 58.31 which is 27.87% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

BK currently has price to earning P/E ratio of 15.16 whereas AA has 49.31 while the forward P/E ratio for the prior stands at 11.76 and for the later it depicts the value of 10.5.

The price to Book P/B for BK is 1.4, Price to Sale is at 9.93 and for AA these ratios stand at 1.56 and 0.63.