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Bank of America (BAC) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
·3 min read

In the latest trading session, Bank of America (BAC) closed at $30.01, marking a -0.4% move from the previous day. This move lagged the S&P 500's daily loss of 0.22%. Elsewhere, the Dow lost 0.23%, while the tech-heavy Nasdaq lost 0.38%.

Coming into today, shares of the nation's second-largest bank had gained 7% in the past month. In that same time, the Finance sector gained 2.53%, while the S&P 500 gained 2.78%.

Wall Street will be looking for positivity from BAC as it approaches its next earnings report date. In that report, analysts expect BAC to post earnings of $0.51 per share. This would mark a year-over-year decline of 31.08%. Meanwhile, our latest consensus estimate is calling for revenue of $19.94 billion, down 10.79% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $1.77 per share and revenue of $85.67 billion. These totals would mark changes of -35.64% and -6.11%, respectively, from last year.

Any recent changes to analyst estimates for BAC should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.06% higher. BAC is holding a Zacks Rank of #2 (Buy) right now.

Looking at its valuation, BAC is holding a Forward P/E ratio of 16.98. This valuation marks a premium compared to its industry's average Forward P/E of 14.51.

Also, we should mention that BAC has a PEG ratio of 2.43. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Banks - Major Regional was holding an average PEG ratio of 2.29 at yesterday's closing price.

The Banks - Major Regional industry is part of the Finance sector. This group has a Zacks Industry Rank of 87, putting it in the top 35% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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