Bank of America Corporation BAC is on track to reward its shareholders through impressive capital-deployment plans. Recently, the company announced an additional share-repurchase program of up to $2.5 billion.
The board of directors of the company has approved the additional repurchase, which in aggregate, offset a rise in regulatory capital resulting from the sale of certain non-core assets in 2018. The Fed has also approved this additional repurchase.
Bank of America intends to make these repurchases either in open market or through privately-negotiated transactions, including Rule 10b5-1 plans, by Jun 30. The plan comes in addition to the $20 billion of authorized buyback capacity announced earlier by the company under its June 2018 plan.
So, is this Zacks Rank #3 (Hold) stock worth a look based on the latest share-repurchase plan? Let’s dig deeper into its fundamental and financial strengths for a finding an answer to this question.
Revenue Growth: The company witnessed a compound annual growth rate of 8.7% over a three-year period (2016-2018). Its projected sales growth of 3.18% for 2019 and 3.19% for 2020 indicates continued improvement in revenues.
Earnings Strength: Bank of America recorded 31.8% EPS growth over the last three-five years. This earnings momentum is likely to continue in the near term as well, as reflected by the company’s projected EPS growth rate of 9.20% and 12.04% for 2019 and 2020, respectively.
Further, Bank of America has an impressive earnings surprise history. The company’s EPS surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 8.29%.
Bank of America’s long-term (three-five years) estimated EPS growth rate of 8% promises rewards for investors, over the long run.
Trades at a Discount: Based on its price-to-book (P/B) and price-to-earnings (P/E) ratio, Bank of America is trading at a discount to the industry it belongs to. The company’s P/B ratio of 1.21 compares to the industry average of 1.32. Additionally, the P/E ratio of 10.09 is lower than the industry average of 10.35.
Moreover, Bank of America has a Value Score of B. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and to identify stocks that are truly trading at a discount.
The stock has lost 5.2% compared with the industry’s 8.1% decline in the past year.
Bank of America currently carries a Zacks Rank of 3.
M&T Bank Corporation’s MTB shares have gained 9.4% in the past month. The stock currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
First Business Financial Services, Inc.’s FBIZ shares have gained 2.1% in the past three months. The stock currently carries a Zacks Rank of 2.
MidWestOne Financial Group Inc’s MOFG shares have gained 13% in the past month. The stock currently carries a Zacks Rank of 2.
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