Friday was a decent session for The Bank of New York Mellon investors, who saw their shares rise 1.3% to a price of $44.43 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
The Bank of New York Mellon Corporation provides a range of financial products and services in the United States and internationally. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 14.34 and an average price to book (P/B) ratio of 1.57. In contrast, The Bank of New York Mellon has a trailing 12 month P/E ratio of 13.8 and a P/B ratio of 0.98.
P/B ratios are calculated by dividing the company's market value by its equity's book value. Equity refers to all of the company's assets minus its liabilities. Traditionally, a P/B ratio of around 1 shows that a company is fairly valued, but owing to consistently higher valuations in the modern era, investors generally compare against sector averages.
The Bank of New York Mellon's PEG ratio is 1.26, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.