Bank of America (BAC) earnings preview: expect revenue decline

4:24 am ET, 12 Jul 2018

Bank of America Corporation (BAC)  is expected to report earnings on July 16 before market open.  The report will be for the fiscal quarter ending June 2018.  Shares are trading at 28.83, down -0.76% from yesterday.

What are the BAC earnings expectations?  What news will the market be watching out for?  

Bank of America's strategy of simplification, efficiency, and risk reduction has slowly begun to pay off. Assets have remained fairly flat since 2009.  Management increased the bank's Tier 1 common ratio dramatically, closed nearly 25% of branches, and trimmed personnel dramatically. 

The bank's lending practices have also been revamped. Consumer loans are now made largely to customers with average FICO scores over 750, while the average American's score was 50 points lower.

Scale and scope advantages are increasingly important as the role of technology in banking grows. Bank of America generated noninterest income averaging just under 2% of total assets over the last three years, in line with JPMorgan Chase and not too far behind U.S. Bancorp and Wells Fargo, each averaging 2.2% of assets in fee income. Expenses are continuing to decline even as revenue grows.

The biggest risk to Bank of America's new, more conservative strategy is that its peers seem to be following the same playbook.  Competition for high-end credit card customers has increased, with firms like JPMorgan and American Express offering escalating perks and rewards for cardholders. Wells Fargo's long-standing emphasis on cross-selling multiple products produced exorbitant pressures on front-line employees and led to widespread fraud in the bank's branches. 

Bank of America Corporation, has a history of beating analysts’ earnings estimates. In the past four quarters, the company: 

  • Beat analyst EPS estimates by 3 cents ($.46 actuals vs. $.43 forecast) in FQ2’17;
  • Beat analyst EPS estimates by 2 cents ($.48 actuals vs. $.46 forecast) in FQ3’17;
  • Beat analyst EPS estimates by 3 cents ($.47 actuals vs. $.44 forecast) in FQ4’17;
  • Beat analyst EPS estimates by 4 cents ($.62 actuals vs. $.58 forecast) in FQ1’18.

For FQ2’18, EPS is expected to grow by 24% year-over-year to $.57, while revenue is expected to decline 3% year-over-year to $22.48 billion.  


Over the last month, Bank of America Corporation (BAC) returned -3.93%.

Bank of America Corporation (BAC) average analyst price target ($34.56) is 19.88% above its current price ($28.83).

For the latest price and information on Bank of America Corporation, please visit Finstead and search for "BAC price" or "BAC news".

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finny Bites, please send us an email at hi@askfinny.com.

Wells Fargo & Co (WFC) earnings preview: revenue decline to be seen

5:01 am ET, 11 Jul 2018

Wells Fargo & Company (WFC)  is expected to report earnings on July 13 before market open.  The report will be for the fiscal quarter ending June 2018. Shares are trading at $55.89, up 1.18%.

What are WFC earnings expectations?  What news will the market be watching out for?  

Wells Fargo is the top deposit gatherer in the United States. Its strategy rests on deep customer relationships, sound risk management, and operational excellence.  Wells Fargo consistently paid less for balance sheet funding than most of its competitors over the past decade, and has also generated more revenue per dollar of assets than most peers over time, because of a loyal base of longtime customers.

Unlike its major competitors, Wells is not a top player in the capital markets. Its business model is more akin to regional banks than to money center institutions. Wells Fargo generates less than half the investment banking fees of companies like JPMorgan Chase, Goldman Sachs, and Bank of America, and trading gains made up only a small percentage of noninterest income. 

Wells Fargo relies on the more stable revenue generated by its brokerage, advisory, and asset management businesses. It competes to a large extent with regional peers, and its scale advantages should grow in importance as technology and compliance spending increase fixed costs across the industry. Wells Fargo deserves a lower cost of capital--and higher multiple--than riskier peers.

Wells Fargo’s sales culture overheated in recent years. Rather than attempting to improve its customers’ financial lives, management chose to increase revenue at all costs, introducing poorly designed incentive programs for front-line employees. This decision led to widespread fraud and risked relationships and reputation built over decades. 

Customers did not abandon Wells Fargo amid scandals and new programs focused on deepening active relationships will actually generate more revenue--and less wasted employee time--than overly ambitious product sales goals.

Wells Fargo & Company has a mixed history of beating analysts’ earnings estimates.  In the past four quarters, the company: 

  • Beat analyst EPS estimates by 5 cents ($1.07 actuals vs. $1.02 forecast) in FQ2’17;
  • Delivered on the analyst EPS estimate ($1.04 actuals vs. $1.04 forecast) in FQ3’17;
  • Missed analyst EPS estimates by 7 cents ($.97 actuals vs. $1.04 forecast) in FQ4’17;
  • Beat analyst EPS estimates by 5 cents ($1.12 actuals vs. $1.07 forecast) in FQ1’18.

For FQ2’18, EPS is expected to grow by 5% year-over-year to $1.12, while revenue is expected to decline 3% year-over-year to $21.56 billion.  

Over the last month, Wells Fargo & Company (WFC) returned +0.56%.

Wells Fargo & Company (WFC) average analyst price target ($61.44) is 9.93% above its current price ($55.89).

For the latest price and information on Wells Fargo & Company, please visit Finstead and search for "WFC price" or "WFC news".

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finny Bites, please send us an email at hi@askfinny.com.

JPMorgan Chase (JPM) earnings preview: will it beat the Street?

9:14 am ET, 09 Jul 2018

J P Morgan Chase & Co (JPM) is expected to report earnings on July 13 before market open.  The report will be for the fiscal quarter ending June 2018.  The shares are trading at 103.72, up 0.11% from yesterday.

What are the JPM earnings expectations?  What news will the market be watching out for?  

JPMorgan Chase’s combination of scale, diversification, and sound risk management seems like a simple path to competitive advantage, but few other firms have been able to execute a similar strategy.  JPMorgan now benefits from a nearly unrivaled combination of scale and scope within the United States, creating unique opportunities including its partnerships with other leading firms like Visa and Amazon.

JPMorgan has become the largest bank in the country, with about $1.4 trillion in deposits. Around $400 billion of these funds bear no interest costs whatsoever. Within payments, JPMorgan is the largest issuer of credit cards in the U.S. and the second-largest acquirer. The company’s investment bank is the leading global generator of fees, and the company’s fixed-income, commodities, and currency trading operations are the largest in the world.

As a systemically important firm, JPMorgan is likely to remain under the regulatory microscope for years to come. Regulatory relief will help smaller banks at the expense of "too big to fail" institutions.

JPMorgan Chase & Co. has a mixed history of beating analysts’ earnings estimates.  In the past four quarters, the company: 

  • Beat analyst EPS estimates by 14 cents ($1.71 actuals vs. $1.57 forecast) in FQ2’17;
  • Beat analyst EPS estimates by 9 cents ($1.76 actuals vs. $1.67 forecast) in FQ3’17;
  • Beat analyst EPS estimates by 7 cents ($1.76 actuals vs. $1.69 forecast) in FQ4’17;
  • Missed analyst EPS estimates by 2 cents ($2.26 actuals vs. $2.28 forecast) in FQ1’18;

For FQ2’18, EPS is expected to grow by 31% year-over-year to $2.24, while revenue is expected to grow 5% year-over-year to $27.66 billion.  


Over the last month, J P Morgan Chase & Co (JPM) returned -3.82%.

J P Morgan Chase & Co (JPM) average analyst price target ($120.91) is 16.57% above its current price ($103.72).

For the latest price and information on J P Morgan Chase & Co, please visit Finstead and search for "JPM price" or "JPM news".

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finny Bites, please send us an email at hi@askfinny.com.

Citigroup (C): Will The Stock Rebound?

12:02 am ET, 09 Apr 2018

Citigroup's stock (NYSE: C) price saw a 7.34% decline this year.

Citi is a leading global bank with about 200 million customers and is present in more than 160 countries of the world. Its brand is outstanding, but many investors are wondering, what is the stock price forecast now? 

Since the company's price-to-book value is around 1, investors barely account for its intrinsic value in the stock price. The elevated CBOE Volatility Index further increases Citi’s profitability.

In fundamental terms, Citigroup has a healthy stock, as demonstrated by its balance sheet. Since the banking regulation is becoming a little less constraining these days and the interest rates are going up, banks are becoming increasingly more profitable.

Can this stock rise further? Per Finstead Research, Citigroup has an average price target of almost $84. It has a significant upside compared to the current price. 

Citigroup has the lowest valuation among its peers.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finny Bites, please send us an email at hi@askfinny.com.

JPMorgan Chase (JPM): What Does The Future Look Like?

6:45 pm ET, 05 Apr 2018

 JPMorgan Chase’s (NASDAQ: JPM) stock price barely increased in today’s trading

Jamie Dimon, the company's CEO, praised President Trump because of his tax cuts and deregulation while criticizing his trade and immigration policies beacause they will likely hurt growth in the United States.

According to Dimon, it is possible for the bank to grow and penetrate into new markets by investing excess capital stemming from the new federal tax cuts and constructive regulatory environment since the 2016 presidential elections.

According to Dimon, JPMorgan can earn a 17% return on the tangible equity that exceeds the target before the enactment of corporate tax cuts. It is also above the company’s 2017 performance by almost 4%.

CEO Dimon pointed out to Wall Street's low-profit estimates and declared that he would concentrate on buybacks to return capital to JPM's shareholders. This is indeed good news for the shareholders.

Dimon holds an opinion that buying back a big block of share would enhance the earnings per share by 2%-3% in the upcoming 5 years, with the tangible book value remaining virtually constant. Currently, the company has 1.6 times tangible book ratio which is below Dimon's threshold.

Per Finstead Research, JP Morgan has the average price target of $119. The stock price has an upside of about 9%.

JPMorgan's valuation is considered to be not overly conservative or aggressive. Based on the forward P/E ratio, JPMorgan is ahead of CMSGS, and  BAC, but behind WFC.  

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finny Bites, please send us an email at hi@askfinny.com.

5 Key Things You Should Understand About The Banking Sector

4:44 pm ET, 22 Jan 2018

If you're pondering investments in the banking sector, there are some key themes for 2018 you should understand that may shape your thinking about investing in large banks such as JP Morgan Chase, Citi, Wells FargoBank of America, or even smaller, regional ones.

The growth of the banking sector has been decreasing over the last 12 months. High interest rates involved have made large corporations to opt for borrowing and debt issuance at the prime rate on credit facilities. 

Here are the five things to know about the banking sector in 2018.

1. Credit Card Lending: In terms of loan development, credit card lending remains a major focus with solid gains and high consumer confidence in employment. Over the years, consumer finance companies and banks have been leading in rewarding credit card programs that attract new customers. Loan growth for most banks remains between single-digit low and medium range in 2018. 

2. The Increase of Net Charge-offs: While credit card lending may affect future margins, the net charge-offs may rise gradually with the maturing of the credit cycle though it can still remain below the historical standards. 

3. Flattening of the Productivity Curve: This is due to the long maturities that have not complied with the short-term rate rise. There are still high expectations of Fed hikes in 2018 with higher productivity continuing to slow down. 

4. Expansion of Interest Margin: This will occur even if the flatter yield curve does not offer similar lending business benefit as the initial rate increases of Fed. 

5. Favorable Regulatory Environment: This is a result of the new stance on deregulation of the new administration despite the stalling of the wider legislative efforts. With this, the earnings from the financial sector will remain favorable in relation to the broader market.

Though there have been variations in the banking sector, the requirements for reduced capital could create room for more lending. This is expected to significantly benefit most financial institutions in 2018. 

Over the last year, JPM returned +36.25%. This return is higher than the Money Center Banks industry (22.22%), the Financial sector (11.89%), and S&P 500 (24.73%) returns.

Over the last year, Citi returned +39.58%.  See below.

Over the last year, BAC returned +40.59%.   Details below.

WFC returned only +17.54%.  While this return is higher than the Financial sector return (11.89%), it is lower than the Money Center Banks industry (22.22%) and S&P 500 (24.73%) returns.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finny Bites, please send us an email at hi@askfinny.com.

Bank of America Earnings: What You Need To Know

5:21 pm ET, 16 Jan 2018

Bank of America (BAC)

On Wednesday morning, before the opening bell, Bank of America (NYSE: BAC) is set to release its quarterly earnings. What should you expect? 

From our perspective, the Bank has a lot of potential for growth. The Fed authorized an additional $5 billion share buyback in December 2017, on top of the Bank’s $12-billion share repurchase earlier last year.  Given the lower dividend payout ratio compared to BAC’s primary competitors, Bank of America is expected to deploy the capital towards growth, which is likely to increase the shareholder value.

The Bank of America saw their deposits continue to grow throughout 2017. Their deposits also grew during the 3 years between 2014 and 2016, despite an overall sluggish global economic environment. 

An expense sharing plan has helped the Corporation save around $8 billion.  The Bank has been fairly aggressive in consolidating branches based on customer demand—and its emphasis on digital operations (including updating ATMs with the latest technology and mobile initiatives) is leading to an increase in online customer base.

For a company that’s was facing margin pressure due to low-interest rates, it is good news to see a gradual improvement in the rate environment.  Net interest income (NII) is on an upswing given the higher interest rates and loan balance. The management team at the Bank of America is optimistic about its margins, resulting from the rate hike and a continued rise in the demand for loans.

Over the last year, BAC returned +35.59%. This return is higher than Money Center Banks Industry (18.11%), Financial Sector (9.83%), and S&P 500 (22.06%) returns.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finny Bites, please send us an email at hi@askfinny.com.

Bank of America Corporation (BAC) Stock Guide

Updated at: 2:22 am ET, 12 Jul 2020

Before we start: if you're looking for BAC stock price, you can quickly find it out by visiting Finny and typing "BAC quote". If you're looking for a quick scoop on BAC stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "BAC". You'll get all this info in one place. Or you can just type "BAC news" to get the latest stock news.

Looking to buy or sell Bank of America Corporation (BAC)? Interested in getting the full scoop on BAC, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this BAC stock guide, we'll address key questions about BAC, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are BAC earnings?
2. When is BAC earnings date?
3. What is BAC dividend?
4. What is BAC dividend yield?
5. What is BAC stock forecast (i.e., prediction)?
6. BAC buy or sell? What is BAC Finny Score?
7. What are the reasons to buy BAC? Why should I buy BAC stock?
8. What are the reasons to sell BAC? Why should I sell BAC stock?
9. What are BAC key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are BAC earnings?

BAC trailing 12-month earnings per share (EPS) is $2.46.

2. When is BAC earnings date?

BAC earnings date is July 16, 2020.

3. What is BAC dividend?

BAC forward dividend is $0.72.

4. What is BAC dividend yield?

BAC forward dividend yield is 3.32%.

Analyst Predictions

5. What is BAC stock forecast (i.e., prediction)?

Based on BAC analyst price targets, BAC stock forecast is $27.15 (for a year from now). That means the average analyst price target for BAC stock is $27.15. The prediction is based on 30 analyst estimates.

The low price target for BAC is $20.00, while the high price target is $37.00.

BAC analyst rating is Buy.

Analysis

6. BAC buy or sell? What is BAC Finny Score?

#{finnyScore:88}Our quantitative analysis shows 7 reasons to buy and 1 reason to sell BAC, resulting in Finny Score of 88.

7. What are the reasons to buy BAC? Why should I buy BAC stock?

Here are the reasons to buy BAC stock:

  • Bank of America is poised to succeed as a provider of retail banking and wealth management services on a nationwide scale.
  • CEO Brian Moynihan has slowly repaired years of damage while mostly staying out of the headlines.
  • Many of Bank of America's past problems were a result of poor capital-allocation decisions. The company's size (it is now too big to make material acquisitions) along with increased regulatory scrutiny reduces this risk going forward.
  • After years of facing margin pressure owing the low rates, Bank of America is finally looking forward to gradual improvement in the rate environment. Net interest yield increased from 2.19% in 2015 to 2.25% in 2016 and to 2.37% in 2017. Net interest income (NII) is also improving driven by higher rates and loan balance.
  • Further, declining expenses continue to support Bank of America’s financials. Its expense-saving plan – Project New BAC (launched in 2011) – helped improve overall efficiency and save as much as $8.0 billion in operating expenses annually till the end of 2014. Further, the same declined at a three-year CAGR of 2.6% (till 2017 end). The company continues to align its banking center network according to customers’ needs, through divestitures/consolidations of branches.
  • Moreover, Bank of America remains focused on acquiring the industry's best deposit franchise. The company’s deposit balances continued to grow, despite an overall sluggish global economic environment, at a three-year (2015-2017) CAGR of 4.6%. With steady economic growth, Bank of America’s initiatives to strengthen its deposit base will support profitability.
  • Bank of America’s sturdy capital deployment activities look impressive. In December 2017, the bank received the Fed’s approval for additional $5 billion share buyback authorization. This is in addition to its 2017 capital plan that included $12 billion share repurchase authorization and a whopping 60% dividend hike.
  • BAC profitability is improving. The YoY profit margin change was 13.77 percentage points. See BAC profitability chart.
  • BAC forward dividend yield is 3.32%, higher than the industry (1.62%) and sector (1.09%) forward dividend yields. See BAC forward dividend chart.
  • BAC PEG ratio (P/E adjusted for growth) is 3.24, which is low compared to its industry peers’ PEG ratios. See BAC PEG chart.
  • BAC average analyst rating is Buy. See BAC analyst rating chart.
  • BAC average analyst price target ($27.15) is above its current price ($24.02). See BAC price target chart.
  • BAC cash to debt ratio is 1.37, higher than the average industry (0.17) and sector (0.18) cash to debt ratio. See BAC cash to debt chart.
  • BAC Enterprise Value/Revenue multiple is 0.44, which is low compared to its industry peers’ Enterprise Value/Revenue multiples. See BAC Enterprise Value/Revenue chart.

8. What are the reasons to sell BAC? Why should I sell BAC stock?

Let's look at the reasons to sell BAC stock (i.e., the bear case):

  • A financial institution of this size and complexity is inherently unmanageable--it's even possible that regulators might decide to break up the company.
  • Bank of America has been cutting expenses for years, and the low-hanging fruit in this realm has been picked.
  • Digital competitors are nipping at the heels of traditional branched banks.
  • Challenges faced by Bank of America in improving fee income remain a major concern. Non-interest income declined at a CAGR of 2.6% over the last five years (2013-2017). Specifically, mortgage banking income is witnessing a drastic downtrend owing to a fall in refinancing and lower origination volumes.
  • Though Bank of America has resolved quite a many litigation issues, it still faces investigations from several federal agencies and a few foreign governments for its business conducts in the pre-crisis period. Legal expenses are expected to continue weighing marginally on the company’s bottom line in the near future.
  • BAC quarterly revenue growth was -18.10%, lower than the industry and sector average revenue growth (1.74% and 2.03%, respectively). See BAC revenue growth chart.

Key Stats

9. What are BAC key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for BAC:

Metrics BAC
Price $25.39
Average Price Target / Upside $27.15 / 6.93%
Average Analyst Rating Buy
Forward Dividend Yield 3.32%
Industry Banks - Global
Sector Financial Services
Number of Employees 204,000
Market Cap $188.35B
Forward P/E Ratio 9.69
Price/Book Ratio 2.31
Revenue (TTM) $81.6B
YoY Quarterly Revenue Growth -18.10%
Profit Margin 29.57%

If you liked this analysis, check out Stock Guides for other stocks.

Disclaimer: The news article above expresses the author’s opinion about the topic of the article. We strongly advise you not to base your investment decisions just on this article alone. If you’d like to become a writer for Finny Bites, please send us an email at hi@askfinny.com.

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