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

Zacks Equity Research
Allegiance Bancshares (ABTX) 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.

In the latest trading session, Bank of America (BAC) closed at $27.91, marking a -0.05% move from the previous day. This move lagged the S&P 500's daily gain of 0.82%. Meanwhile, the Dow gained 0.82%, and the Nasdaq, a tech-heavy index, added 0.64%.

Coming into today, shares of the nation's second-largest bank had lost 6.68% in the past month. In that same time, the Finance sector lost 4.06%, while the S&P 500 lost 4.58%.

Investors will be hoping for strength from BAC as it approaches its next earnings release. On that day, BAC is projected to report earnings of $0.72 per share, which would represent year-over-year growth of 14.29%. Meanwhile, our latest consensus estimate is calling for revenue of $23.20 billion, up 2.63% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.86 per share and revenue of $92.60 billion, which would represent changes of +9.58% and +1.49%, respectively, from the prior year.

Any recent changes to analyst estimates for BAC should also be noted by investors. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. BAC is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that BAC has a Forward P/E ratio of 9.78 right now. Its industry sports an average Forward P/E of 10.87, so we one might conclude that BAC is trading at a discount comparatively.

Investors should also note that BAC has a PEG ratio of 1.09 right now. 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. The Banks - Major Regional was holding an average PEG ratio of 1.33 at yesterday's closing price.

The Banks - Major Regional industry is part of the Finance sector. This group has a Zacks Industry Rank of 57, putting it in the top 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.

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


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