Stock Markets: Bank of America Rallies Higher

Stock Markets:  Bank of America Rallies Higher

Bank of America Corp. (NYSE: BAC) is a stock with one of the best performance histories in the market.  Bank of America was incorporated in the early 19th century and is now headquartered in Charlotte, North Carolina.  At its core, Bank of America is banking and financial holdings company, which offers financial, investing, asset management, and risk management products and services.

The company serves individuals and financial institution and provides banking and financial solutions to small-market and middle-market businesses, in addition to their institutional investor base. The company classifies its business operations into the following segments: Consumer Banking, Global Banking, Global Wealth and Investment Management, Global Markets, and Legacy Assets and Servicing.  Stock investors are able to gain exposure to BAC through an online trading platform using instruments tied to the value of the S&P 500.  

Recent Developments

In a recent development, Lloyd’s emerged as a leading bidder to buy Bank of America’s UK credit card business. In September, the company says it intended to eliminate about twelve senior positions at its Asia region’s corporate offices and investment banking operations. 

The company changed accounting methods as per FASB Accounting Standards Codification 310-20, Nonrefundable fees, other costs. The change was reflected in the third quarter. Under the new accounting method, the company will amortize premiums and accrete discounts over the lives of debt securities. Earlier in July 2015, FINRA fines Merrill Lynch amounting $5 million for not adequately disclosing material facts in sales of volatility-linked structured notes to retail customers.

 

BAC’s third quarter earnings per share as reported on October 17, was seen at $0.41 beating the Reuters average analyst expectation of $0.34. Its net revenue for the quarter was $21.6 billion versus 20.97 billion expected by analysts. On average, analysts on Reuters were expecting $1.64 per-share earnings for the full year 2017 and full-year revenues $87,738.80 billion.

Trading Activity & Dividend Yields

The year 2016 was a volatile year for the BAC’s investors, as it started with valuations of $17-$16 which later dove to $11 in February.  All of this just to see the stock get doubled quickly to $23 in December, which is also its five-year high. At present, it is trading near its previous resistance above $23.

BAC is a regular dividend payer. It is currently paying $0.08 a share for its quarterly dividend. At current prices, the stock is yielding 1.36%. BAC’s trailing-twelve-month earnings per share is $1.35. At current levels, the price-to-earnings ratio of 16.40 is in line with the industry average of 15.13, according to Reuters.

Bank of America Corp has given a 2.83% annualized return on equity in last 5 years while the industry average is 23.38% during the same period. Similarly, the stock gives a 0.35% annualized return on assets during the last five years compared to industry average of 2.81%. Sales have a negative growth rate of – 8.09% annualized in last 5 years despite the industry growth rate of 15.22% during the same period. But the analysts are optimistic about the stock and recommending Outperformer on Reuters.

 

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