Now trading at a price of $29.84, Bank of America has moved -0.6% so far today.
Bank of America returned losses of -19.0% last year, with its stock price reaching a high of $37.87 and a low of $24.96. Over the same period, the stock underperformed the S&P 500 index by -33.0%. As of April 2023, the company's 50-day average price was $27.45. 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. Based in Charlotte, NC, the large-cap Finance company has 213,000 full time employees. Bank of America has offered a 3.0% dividend yield over the last 12 months.
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 Market May Be Undervaluing Bank of America's Assets and Equity:
Bank of America has a trailing twelve month P/E ratio of 7.7, compared to an average of 14.34 for the Finance sector. Based on its EPS guidance of $3.26, the company has a forward P/E ratio of 8.4. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 4.9%. On this basis, the company's PEG ratio is 1.57, which suggests that it is overpriced. In contrast, the market is likely undervaluing Bank of America in terms of its equity because its P/B ratio is 0.91 while the sector average is 1.57. The company's shares are currently trading -43.3% below their Graham number.
Analysts Give Bank of America an Average Rating of Buy:
The 25 analysts following Bank of America have set target prices ranging from $27.5 to $51.0 per share, for an average of $33.86 with a buy rating. As of April 2023, the company is trading -18.9% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Bank of America has a very low short interest because 1.0% of the company's shares are sold short. Institutions own 70.4% of the company's shares, and the insider ownership rate stands at 0.11%, suggesting a small amount of insider investors. The largest shareholder is Berkshire Hathaway, Inc, whose 13% stake in the company is worth $30,820,304,016.
