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Bank of America (BAC) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Bank of America (BAC) closed at $25.15 in the latest trading session, marking a +1.49% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.83%. Meanwhile, the Dow gained 0.62%, and the Nasdaq, a tech-heavy index, added 1.43%.

BAC will be looking to display strength as it nears its next earnings release. On that day, BAC is projected to report earnings of $0.33 per share, which would represent a year-over-year decline of 55.41%. Meanwhile, our latest consensus estimate is calling for revenue of $21.09 billion, down 8.64% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $1.48 per share and revenue of $85.90 billion, which would represent changes of -46.18% and -5.86%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for BAC. These revisions typically reflect the latest short-term business trends, which can change frequently. 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.

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. Within the past 30 days, our consensus EPS projection has moved 0.15% higher. 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 16.76. Its industry sports an average Forward P/E of 17.15, so we one might conclude that BAC is trading at a discount comparatively.

Meanwhile, BAC's PEG ratio is currently 2.39. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Banks - Major Regional stocks are, on average, holding a PEG ratio of 2.87 based on yesterday's closing prices.

The Banks - Major Regional industry is part of the Finance sector. This group has a Zacks Industry Rank of 64, putting it in the top 26% 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.

To follow BAC in the coming trading sessions, be sure to utilize Zacks.com.


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