Bank of America Corporation (NYSE:BAC) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $32.84 at one point, and dropping to the lows of $29.17. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Bank of America’s current trading price of $29.3 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Bank of America’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Bank of America
What is Bank of America worth?
According to my valuation model, Bank of America seems to be fairly priced at around 7.56% below my intrinsic value, which means if you buy Bank of America today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $31.7, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Bank of America’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Bank of America generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Bank of America’s earnings over the next few years are expected to increase by 56.40%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? BAC’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on BAC, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Bank of America. You can find everything you need to know about Bank of America in the latest infographic research report. If you are no longer interested in Bank of America, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.