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Bank of America (BAC) Gains But Lags Market: What You Should Know

Zacks Equity Research

Bank of America (BAC) closed the most recent trading day at $29.46, moving +0.37% from the previous trading session. This change lagged the S&P 500's 0.72% gain on the day. Meanwhile, the Dow gained 0.85%, and the Nasdaq, a tech-heavy index, added 1.06%.

Heading into today, shares of the nation's second-largest bank had gained 5.88% over the past month, outpacing the Finance sector's gain of 2.13% and the S&P 500's gain of 2.25% in that time.

BAC will be looking to display strength as it nears its next earnings release. On that day, BAC is projected to report earnings of $0.68 per share, which would represent year-over-year growth of 3.03%. Meanwhile, our latest consensus estimate is calling for revenue of $22.14 billion, down 2.8% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.82 per share and revenue of $90.99 billion, which would represent changes of +8.05% and -0.28%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for BAC. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.14% lower within the past month. BAC is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that BAC has a Forward P/E ratio of 10.4 right now. This valuation marks a discount compared to its industry's average Forward P/E of 11.33.

It is also worth noting that BAC currently has a PEG ratio of 1.16. 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 industry currently had an average PEG ratio of 1.4 as of yesterday's close.

The Banks - Major Regional industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 193, which puts it in the bottom 25% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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