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Bank of America (BAC) Gains As Market Dips: What You Should Know

Zacks Equity Research

Bank of America (BAC) closed at $32.84 in the latest trading session, marking a +0.46% move from the prior day. This change outpaced the S&P 500's 0.16% loss on the day. Meanwhile, the Dow lost 0.2%, and the Nasdaq, a tech-heavy index, lost 0.24%.

Coming into today, shares of the nation's second-largest bank had gained 4.04% in the past month. In that same time, the Finance sector gained 3.02%, while the S&P 500 gained 4.31%.

Wall Street will be looking for positivity from BAC as it approaches its next earnings report date. On that day, BAC is projected to report earnings of $0.69 per share, which would represent a year-over-year decline of 1.43%. Our most recent consensus estimate is calling for quarterly revenue of $22.22 billion, down 2.29% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.69 per share and revenue of $91.21 billion, which would represent changes of +3.07% and -0.04%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for BAC. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. The Zacks Consensus EPS estimate has moved 0.38% higher within the past month. BAC currently has a Zacks Rank of #3 (Hold).

Investors should also note BAC's current valuation metrics, including its Forward P/E ratio of 12.15. For comparison, its industry has an average Forward P/E of 12.21, which means BAC is trading at a discount to the group.

We can also see that BAC currently has a PEG ratio of 1.35. 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 1.49 as of yesterday's close.

The Banks - Major Regional industry is part of the Finance sector. This group has a Zacks Industry Rank of 154, putting it in the bottom 40% 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.

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


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