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

Zacks Equity Research
Opus Bank (OPB) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Bank of America (BAC) closed the most recent trading day at $24.37, moving +1.08% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.86%. At the same time, the Dow added 1.14%, and the tech-heavy Nasdaq gained 0.38%.

Prior to today's trading, shares of the nation's second-largest bank had lost 15.2% over the past month. This has lagged the Finance sector's loss of 8.73% and the S&P 500's loss of 7.55% in that time.

BAC will be looking to display strength as it nears its next earnings release, which is expected to be January 16, 2019. In that report, analysts expect BAC to post earnings of $0.64 per share. This would mark year-over-year growth of 36.17%. Our most recent consensus estimate is calling for quarterly revenue of $22.39 billion, up 9.55% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.55 per share and revenue of $91.11 billion, which would represent changes of +39.34% and +4.31%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for BAC. Recent revisions tend to reflect the latest near-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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.04% lower. BAC currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, BAC is holding a Forward P/E ratio of 9.46. This valuation marks a discount compared to its industry's average Forward P/E of 9.93.

Also, we should mention that BAC has a PEG ratio of 1.18. 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. BAC's industry had an average PEG ratio of 1.04 as of yesterday's close.

The Banks - Major Regional industry is part of the Finance sector. This group has a Zacks Industry Rank of 197, putting it in the bottom 23% 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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