Bank of America Stock – A Comprehensive Overview

It's been a great morning session for Bank of America investors, who saw their shares rise 1.4% to a price of $29.64 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.

Bank of America Is Potentially Undervalued and Trades Below Its Graham Number:

Bank of America Corporation, through its subsidiaries, provides banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments worldwide. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 14.34 and an average price to book (P/B) ratio of 1.57. In contrast, Bank of America has a trailing 12 month P/E ratio of 8.3 and a P/B ratio of 0.91.

Bank of America's PEG ratio is 2.03, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

EPS Trend Sustained Primarily by Reducing the Number of Shares Outstanding:

2018 2019 2020 2021 2022 2023
Revenue (MM) $91,020 $91,244 $85,528 $89,113 $94,950 $105,705
Interest Income (MM) $48,162 $48,891 $43,360 $42,934 $52,462 $57,052
Operating Margins 38.0% 36.0% 22.0% 38.0% 33.0% 32.0%
Net Margins 31.0% 30.0% 21.0% 36.0% 28.0% 28.0%
Net Income (MM) $28,147 $27,430 $17,894 $31,978 $27,528 $29,783
Depreciation & Amort. (MM) $538 $1,729 $1,843 $1,898 $1,978 $2,006
Earnings Per Share $2.61 $2.75 $1.87 $3.57 $3.19 $3.48
Diluted Shares (MM) 10,237 9,443 8,797 8,558 8,168 8,065
Free Cash Flow (MM) $39,520 $61,777 $37,993 -$7,193 -$6,327 $44,638
Net Current Assets (MM) -$2,012,999 -$2,104,175 -$2,473,236 -$2,811,532 -$2,608,520 -$2,660,736
Long Term Debt (MM) $229,392 $240,856 $262,934 $280,117 $275,982 $286,073
Net Debt / EBITDA 2.06 3.0 -4.71 -1.24 2.21 -1.32

Bank of America has weak revenue growth and no capital expenditures, average net margins with a stable trend, and irregular cash flows. We also note that the company has low leverage working in its favor. However, the firm has EPS growth achieved by reducing the number of outstanding shares.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.