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

Zacks Equity Research

In the latest trading session, Bank of America (BAC) closed at $35.22, marking a +0.2% move from the previous day. This change lagged the S&P 500's 0.3% gain on the day. Meanwhile, the Dow gained 0.27%, and the Nasdaq, a tech-heavy index, added 0.3%.

Coming into today, shares of the nation's second-largest bank had gained 5.15% in the past month. In that same time, the Finance sector gained 2.36%, while the S&P 500 gained 2.69%.

BAC will be looking to display strength as it nears its next earnings release, which is expected to be January 15, 2020. On that day, BAC is projected to report earnings of $0.50 per share, which would represent a year-over-year decline of 28.57%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $22.15 billion, down 2.56% from the year-ago period.

Investors might also notice recent changes to analyst estimates for BAC. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

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.

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 0.04% lower. BAC is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note BAC's current valuation metrics, including its Forward P/E ratio of 13.07. Its industry sports an average Forward P/E of 12.62, so we one might conclude that BAC is trading at a premium comparatively.

Investors should also note that BAC has a PEG ratio of 1.45 right now. 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. Banks - Major Regional stocks are, on average, holding a PEG ratio of 1.53 based on yesterday's closing prices.

The Banks - Major Regional industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 32, which puts it in the top 13% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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