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Bank of America Corp BAC

Morningstar Rating
$34.37 +0.05 (0.13%)
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Company Report

NYCB Was Uniquely Risky; We Would Not Read Too Much Into the Entire Banking Sector

Our thesis on the U.S. banks following the Silicon Bank fallout was that all of the banks we covered, except for First Republic (which we downgraded to a $3 fair value estimate on March 20, 2023, and a $0 fair value on April 27, 2023), would be able to weather the storm. We believed that banks in trouble were in uniquely risky positions. We believe this thesis has largely held up, and sorting through banks based on their unique risk profiles remains necessary and valuable. To the extent that the market is selling off all banks because of what has happened to NYCB, we think there could be opportunities once again while acknowledging the significant time horizon risk (how long does it take for the banks to prove to the market they are fine) and the choppy waters that could occur in the meantime (we expect more commercial real estate related loan losses in the future).

Price vs Fair Value

BAC is trading at a 2% discount.
Price
$34.31
Fair Value
$23.00
Uncertainty
Medium
1-Star Price
$73.66
5-Star Price
$28.90
Economic Moat
Mspy
Capital Allocation
Lmvxzbpxn

Bulls Say, Bears Say

Bulls

Bank of America is poised to succeed on a nationwide scale, and there seems to be no structural reason it can't be one of the strongest bank franchises going forward.

Bears

If the economy ever falters and rates are cut, watch out for the downside. Further, Bank of America is hamstrung with a longer duration securities portfolio, which will take years to mature away.

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News

Trading Information

Previous Close Price
$34.33
Day Range
$34.1634.65
52-Week Range
$24.9734.69
Bid/Ask
$34.37 / $34.38
Market Cap
$270.54 Bil
Volume/Avg
17.0 Mil / 42.1 Mil

Key Statistics

Price/Earnings (Normalized)
11.09
Price/Sales
2.81
Dividend Yield (Trailing)
2.68%
Dividend Yield (Forward)
2.80%
Total Yield
4.38%

Company Profile

Bank of America is one of the largest financial institutions in the United States, with more than $2.5 trillion in assets. It is organized into four major segments: consumer banking, global wealth and investment management, global banking, and global markets. Bank of America's consumer-facing lines of business include its network of branches and deposit-gathering operations, retail lending products, credit and debit cards, and small-business services. The company's Merrill Lynch operations provide brokerage and wealth-management services, as does its private bank. Wholesale lines of business include investment banking, corporate and commercial real estate lending, and capital markets operations. Bank of America has operations in several countries but is primarily U.S.-focused.
Sector
Financial Services
Industry
Banks - Diversified
Stock Style Box
Large Value
Total Number of Employees
213,000

Competitors

Valuation

Metric
BAC
C
WFC
Price/Earnings (Normalized)
11.0910.7610.60
Price/Book Value
1.030.561.18
Price/Sales
2.811.372.46
Price/Cash Flow
6.564.155.80
Price/Earnings
BAC
C
WFC

Financial Strength

Metric
BAC
C
WFC
Quick Ratio
Current Ratio
Interest Coverage
Quick Ratio
No chart available

Profitability

Metric
BAC
C
WFC
Return on Assets (Normalized)
0.99%0.41%1.04%
Return on Equity (Normalized)
12.26%5.31%12.17%
Return on Invested Capital (Normalized)
Return on Assets
BAC
C
WFC
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Banks - Diversified Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
JPM
JPMorgan Chase & CoNqcxb$531.1 Bil
WFC
Wells Fargo & CoClzw$195.8 Bil
HSBC
HSBC Holdings PLC ADRVxrd$147.3 Bil
RY
Royal Bank of CanadaQqdlq$136.1 Bil
MUFG
Mitsubishi UFJ Financial Group Inc ADRDmdr$119.8 Bil
TD
The Toronto-Dominion BankFsyq$106.6 Bil
C
Citigroup IncTqw$105.2 Bil
UBS
UBS Group AGBxqfplc$91.9 Bil
SAN
Banco Santander SA ADRNbxgtv$66.2 Bil

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