Critical Survey: M&T Bank (NYSE:MTB) versus Bank of New York Mellon (NYSE:BK)

M&T Bank (NYSE:MTB) and Bank of New York Mellon (NYSE:BK) are both large-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, earnings, risk, dividends, analyst recommendations, institutional ownership and valuation.

Profitability

This table compares M&T Bank and Bank of New York Mellon’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
M&T Bank	20.44%	10.35%	1.30%
Bank of New York Mellon	12.27%	13.46%	1.16%

Earnings & Valuation

This table compares M&T Bank and Bank of New York Mellon”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
M&T Bank	$13.45 billion	2.24	$2.59 billion	$15.44	12.52
Bank of New York Mellon	$39.91 billion	1.79	$4.53 billion	$6.55	15.45

Bank of New York Mellon has higher revenue and earnings than M&T Bank. M&T Bank 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.

Insider and Institutional Ownership

84.7% of M&T Bank shares are owned by institutional investors. Comparatively, 85.3% of Bank of New York Mellon shares are owned by institutional investors. 0.5% of M&T Bank shares are owned by company insiders. Comparatively, 0.1% of Bank of New York Mellon shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Volatility and Risk

M&T Bank has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500. Comparatively, Bank of New York Mellon has a beta of 1.12, suggesting that its stock price is 12% more volatile than the S&P 500.

Dividends

M&T Bank pays an annual dividend of $5.40 per share and has a dividend yield of 2.8%. Bank of New York Mellon pays an annual dividend of $2.12 per share and has a dividend yield of 2.1%. M&T Bank pays out 35.0% of its earnings in the form of a dividend. Bank of New York Mellon pays out 32.4% 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 increased its dividend for 14 consecutive years.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for M&T Bank and Bank of New York Mellon, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
M&T Bank	1	7	13	0	2.57
Bank of New York Mellon	0	6	8	0	2.57

M&T Bank presently has a consensus target price of $212.8750, suggesting a potential upside of 10.15%. Bank of New York Mellon has a consensus target price of $95.0769, suggesting a potential downside of 6.05%. Given M&T Bank’s higher possible upside, research analysts plainly believe M&T Bank is more favorable than Bank of New York Mellon.

About M&T Bank

M&T Bank Corp. operates as a bank holding company, which engages in the provision of retail and commercial banking, trust, wealth management, and investment services. It operates through the following segments: Commercial Bank, Retail Bank, Institutional Services and Wealth Management, and All Other. The Commercial Bank segment offers a wide range of credit products and banking services to middle-market and large commercial customers, mainly within the markets served by the company. The Retail Bank segment refers to the services to consumers and small businesses through the company’s branch network and several other delivery channels such as telephone banking, internet banking, and ATMs. The Institutional Services and Wealth Management segment relates to helping high net worth individuals, institutions, and families grow, preserve, and transfer wealth. The All Other segment reflects other activities of the company that are not directly attributable to the reported segments. The company was founded on August 30, 1856 and is headquartered in Buffalo, NY.

About Bank of New York Mellon

The Bank of New York Mellon Corporation provides a range of financial products and services in the United States and internationally. The company operates through Securities Services, Market and Wealth Services, Investment and Wealth Management, and other segments. The Securities Services segment offers custody, trust and depositary, accounting, exchange-traded funds, middle-office solutions, transfer agency, services for private equity and real estate funds, foreign exchange, securities lending, liquidity/lending services, and data analytics. This segment also provides trustee, paying agency, fiduciary, escrow and other financial, issuer, and support services for brokers and investors. The Market and Wealth Services segment offers clearing and custody, investment, wealth and retirement solutions, technology and enterprise data management, trading, and prime brokerage services. This segment also provides integrated cash management solutions, including payments, foreign exchange, liquidity management, receivables processing and payables management, and trade finance and processing services. The Investment and Wealth Management segment offers investment management strategies and distribution of investment products, investment management, custody, wealth and estate planning, private banking, investment, and information management services. The Other segment engages in the provision of leasing, corporate treasury, derivative and other trading, corporate and bank-owned life insurance, renewable energy investment, and business exit services. It serves central banks and sovereigns, financial institutions, asset managers, insurance companies, corporations, local authorities and high net-worth individuals, and family offices. The Bank of New York Mellon Corporation was founded in 1784 and is headquartered in New York, New York.