Back to top

Image: Bigstock

Bank of America (BAC) Gains But Lags Market: What You Should Know

Read MoreHide Full Article

Bank of America (BAC - Free Report) closed at $23.39 in the latest trading session, marking a +1.04% move from the prior day. The stock lagged the S&P 500's daily gain of 1.47%. At the same time, the Dow added 2.32%, and the tech-heavy Nasdaq gained 1.2%.

Prior to today's trading, shares of the nation's second-largest bank had lost 6.88% over the past month. This has lagged the Finance sector's gain of 0.41% and the S&P 500's gain of 0.74% in that time.

Investors will be hoping for strength from BAC as it approaches its next earnings release, which is expected to be July 16, 2020. On that day, BAC is projected to report earnings of $0.32 per share, which would represent a year-over-year decline of 56.76%. Our most recent consensus estimate is calling for quarterly revenue of $21.09 billion, down 8.64% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $1.41 per share and revenue of $85.95 billion, which would represent changes of -48.73% and -5.8%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for BAC. These recent revisions tend to reflect the evolving nature of short-term business trends. 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. 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, 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. The Zacks Consensus EPS estimate has moved 0.15% higher within the past month. BAC is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, BAC is currently trading at a Forward P/E ratio of 16.44. For comparison, its industry has an average Forward P/E of 16.36, which means BAC is trading at a premium to the group.

Investors should also note that BAC has a PEG ratio of 2.35 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BAC's industry had an average PEG ratio of 2.59 as of yesterday's close.

The Banks - Major Regional industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 86, which puts it in the top 34% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Bank of America Corporation (BAC) - free report >>

Published in