Shares of Bank of America Corporation (BAC) hit a new 52-week high, touching $15.30 in the first half of the trading session on Nov 19. However, the stock closed the session at $15.20, which reflects a solid year-to-date return of 26.7%. The trading volume for the session was 160.6 million shares.
Despite the strong price appreciation, this Zacks Rank #3 (Hold) banking giant has considerable upside left, given its positive estimate revision over the last 30 days and expected year-over-year earnings growth of 8.25% for 2013.
BofA’s impressive price performance reflects strong third-quarter 2013 results comprising a positive earnings surprise of 11.1%. Additionally, the company continues to strengthen its balance sheet position as reflected in its improved capital ratios.
On Oct 16, BofA declared third-quarter earnings of 20 cents per share, beating the Zacks Consensus Estimate of 18 cents. Results were aided by substantial reduction in the provision for credit losses and lower non-interest expenses.
Non-interest expenses were $16.4 billion, down 7% from $17.5 billion in the year-ago quarter. Though BofA has been continuously facing litigations, its cost containment program is helping it manage the legal expenses to a large extent.
Provision for credit losses decreased 83% year over year to $296 million. As of Sep 30, 2013, nonperforming loans, leases and foreclosed properties ratio was 2.17%, down 64 bps year over year.
Moreover, BofA has delivered 3 positive earnings surprises in the last 4 quarters with an average beat of 30.13%.
Estimate Revisions Show Potency
In the last 30 days, the Zacks Consensus Estimate for 2013 increased 1.1% to 90 cents per share. However, for 2014, the Zacks Consensus Estimate remained unchanged at $1.33 per share over the same time frame.
Better performing major regional banks worth considering include BankUnited, Inc. (BKU), Fifth Third Bancorp (FITB) and KeyCorp. (KEY). All these stocks carry a Zacks Rank #2 (Buy).