BNY earned a 29% return on tangible equity and grew earnings per share 24% this quarter. At $143.47 it trades near 13.8 times my next-year earnings. Growth slowing to about 6.5% and thinner capital buffers point to roughly $154, a hold.
Key points
- 24% earnings-per-share growth in the third quarter, on 12% revenue growth and 39% pretax margins.
- 15% net interest income growth in 2026 came mostly from reinvesting old bonds at higher yields. That lift fades in 2027.
- 5.7% Tier 1 leverage ratio, a basic capital cushion, sits near the bottom of management's 5.5% to 6% range. That limits buybacks.
The call
The price needs only slower growth. At $143.47, BNY trades near 13.8 times my estimate of $10.39 for the next four quarters. Hold that multiple a year from now and earnings need to grow only about 6% to reach $11.04 a share. That is well below this year's pace.
Quarterly revenue ($ billions) and pretax margin (%)- Revenue
- Revenue, my estimate
- Pretax margin
- Pretax margin, my estimate
Source: BNY financial supplements, Oct 16 2025 and Oct 15 2026; Q4 FY26E is my estimate from guidance
I expect about 10% earnings growth, enough for a modest gain but not a buy. Fee growth is real: custody assets are up 10% and ETF servicing is up 26%. But part of this year's revenue is pass-through pay for running Trump Accounts, which carries matching costs. Lower capital ratios also mean fewer shares get bought back.
Valuation
| Step | Figure |
|---|
| 2026 earnings per share, my estimate | $9.33 |
| 2027 revenue growth, my estimate | 6.5% |
| 2027 earnings per share, my estimate | $10.48 |
| Forward earnings per share, Oct 2027 | $11.43 |
| Multiple | 13.5 times |
| 12-month target | $154.34 |
I use 13.5 times, a bit above today's 13.8 times trailing guidance-year earnings once growth slows, and close to where the stock has traded on forward earnings. At 13 times or less the stock is flat. The upside is about 8% and the downside in a slower-growth case is about 7%, so the bet is balanced.
Twelve-month value per share at each earnings multiple ($)My estimate: $11.43 forward earnings per share in Oct 2027 times each multiple; price $143.47 on Oct 16 2026
Risks
- Rate cuts could squeeze deposit margins faster than bond reinvestment helps. Watch the quarterly net interest margin, 1.43% in the third quarter.
- Capital could tighten further if bond losses (AOCI, unrealized losses on securities held) keep widening. Watch whether the leverage ratio drops below 5.5%.
- A market sell-off would cut fees tied to asset values. Watch custody assets, $63.4 trillion at September 30.
What would change my mind
If 2027 guidance in January shows revenue growth above 8% with expenses near 5%, I would move to a buy.