Bank of America (BAC) Exceeds Market Returns: Some Facts to Consider

In the latest trading session, Bank of America (BAC) closed at $43.28, which is a +0.49% increase from its previous closing price. Notably, BAC outperformed the S&P 500, which moved up by only 0.16%. In comparison, the Dow Jones Industrial Average saw a minimal gain of 0.01%, while the Nasdaq index, known for its tech-heavy listings, experienced a rise of 0.46%.

As the market trends show, Bank of America, being the second-largest bank in the United States, has faced a challenging month, with its shares dropping by 3.13%. Meanwhile, the Finance sector overall declined by 0.19%, and the S&P 500 index has fallen by 3.59% within the same timeframe.

Investors and analysts are eagerly awaiting the upcoming earnings report for Bank of America. The bank is expected to announce earnings of $0.80 per share, which represents a slight decline of 3.61% compared to the same period last year. Revenue projections stand at $26.71 billion, which would reflect a 3.47% increase year-over-year.

Earnings and Revenue Expectations

For the entire fiscal year, Zacks Consensus Estimates suggest an earning of $3.68 per share and revenue of $108.36 billion. These figures indicate a year-on-year growth of +12.2% for earnings and +6.36% for revenue.

Analyst Changes and Stock Price Performance

Investors should monitor any recent changes in analyst estimates regarding Bank of America. Adjustments in these estimates often signal shifting business trends which can occur rapidly. Positive changes in estimates usually illustrate analysts' faith in the company's operational success and profit potential.

Historical data shows that these estimate modifications can significantly influence stock price movements in the short run. To track this, Zacks has developed a quantitative model known as the Zacks Rank, which incorporates these estimate changes and provides an effective rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank has demonstrated a strong track record of performance, with #1 rated stocks achieving an average annual return of +25% since 1988. Over the past month, Bank of America has garnered a Zacks Rank of #3 (Hold) as its consensus EPS projection has decreased by 0.58%.

Valuation Insights

From a valuation standpoint, Bank of America is currently trading at a Forward P/E ratio of 11.71. This is lower than the industry average Forward P/E of 15.29. Furthermore, BAC has a PEG ratio of 1.17, a metric that accounts for both earnings potential and expected growth. In contrast, the Financial - Investment Bank industry has a PEG ratio of 1.09.

The Financial - Investment Bank sector, to which Bank of America belongs, currently holds a Zacks Industry Rank of 36, placing it within the top 15% of over 250 analyzed industries.

Conclusion

The Zacks Industry Rank methodology assesses the strength of various industry sectors by evaluating the average Zacks Rank of individual stocks within those groups. Research indicates that industries rated in the top 50% tend to outperform those in the bottom 50% by a ratio of 2 to 1. Investors should remain vigilant concerning these factors that impact stock performance and keep track of further insights on Zacks.com.

Banking, Finance, Earnings