american bank (BAC) has been one of the most-watched stocks recently by Zacks.com visitors. Therefore, we recommend considering several factors that can affect a stock's short-term performance.
The country's second-largest bank's stock price rose +6.6% over the past month. By comparison, the Zacks S&P 500 Composite Index, +3.6% has not. Zacks Banks – Bank of America's key regional industry has gained 6.1% in this period. The key question here is where the stock is likely to go in the short term.
While media releases and rumors about significant changes in a company's business prospects typically cause its stock to “trend” and lead to immediate price movements, there are some fundamentals that ultimately govern buy-and-hold decisions. There are always facts.
Regarding revisions to performance forecasts
Zacks prioritizes evaluating changes in a company's future earnings expectations above all else. That's because we believe that the present value of future income streams determines the fair value of a stock.
Essentially, we study how the sell-side analysts covering a stock are revising their earnings estimates to reflect the impact of the latest business trends. And as a company's earnings expectations rise, so will the fair value of its stock. If the fair value is higher than the current market price, investors will be more willing to buy the stock, causing the price to rise. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
For the current quarter, Bank of America is expected to post earnings of $0.77 per share, representing a year-over-year change of -18.1%. The Zacks Consensus Estimate has changed -0.1% over the past 30 days.
The consensus earnings estimate for the current fiscal year of $3.14 represents a -8.2% change from the prior year. This estimate has changed by -0.1% over the past 30 days.
Next year's consensus earnings estimate of $3.38 represents a +7.7% change from what Bank of America would have reported a year ago. Over the past month, the forecast has changed by -0.1%.
The Zacks Rank, a proprietary stock evaluation tool with a strong, outside-audited track record, effectively harnesses the power of earnings estimate revisions to deliver a more definitive picture about near-term stock price direction. We provide The magnitude of the recent change in consensus estimates, along with three other factors related to earnings expectations, has given Bank of America a Zacks Rank #3 (Hold).
The chart below shows the company's consensus EPS estimate over the next 12 months over time.
12 months EPS
Revenue growth forecast
Earnings growth is arguably the best indicator of a company's financial health, but nothing will happen if a company can't grow its revenue. After all, it's nearly impossible for a company to increase profits over a long period of time without increasing revenue. Therefore, it's important to know a company's earnings growth potential.
For Bank of America, the consensus revenue estimate for the current quarter is $25.22 Billion, representing a year-over-year change of -3.9%. The current and next fiscal year estimates of $99.7 billion and $101.39 billion represent changes of +1.1% and +1.7%, respectively.
Last reported results and surprising details
Bank of America reported revenue of $21.96 billion in its last reported quarter, representing a -10.5% change from the year-ago period. EPS for the same period was $0.70, compared to $0.85 a year ago.
The reported revenue is a surprise of -8.79% when compared to the Zacks Consensus Estimate of $24.07 billion. EPS surprise was +1.45%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company has surpassed consensus revenue estimates three times during this period.
evaluation
You cannot make efficient investment decisions without considering stock valuation. Whether a stock's current price accurately reflects the intrinsic value of the underlying business and the company's growth prospects is a key determinant of future stock performance.
Compare the current value of a company's valuation multiples, such as price to earnings (P/E), price to sales (P/S), and price to cash flow (P/CF), to its own value, while also Value helps determine whether a stock is fairly valued, overvalued, or undervalued, and by comparing a company to its peers based on these parameters, you can determine whether a stock is reasonably priced. I can understand the gender.
The Zacks Value Style Score (part of the Zacks Style Scores system) pays close attention to both traditional and non-traditional valuation metrics and rates stocks from A to F, where A is better than B. , B is better than C, A is better than B, and B is better than C). ), can be very helpful in identifying whether a stock is overvalued, properly valued, or temporarily undervalued.
Bank of America is rated C on this score, indicating that it trades on par with its peers. Click here to see the values of some of the metrics that determined this grade.
conclusion
The facts discussed here, and much of the other information on Zacks.com, may help you decide whether the market buzz about Bank of America is worth paying attention to. However, the company's Zacks Rank #3 suggests it could outperform the broader market in the near term.
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Bank of America Corporation (BAC): Free Stock Analysis Report
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