Bank of America (BAC - Free Report) is on some kind of unbelievable run. The stock is up about 35% over the last month and investors are bidding it up looking for more! Let's take a look at the fundamentals of this stock and explore why it is a Zacks Rank #1 (Strong Buy) and the Bull of the Day.
Why I Like It
A good earnings history when compared to the Zacks Consensus Estimate.This is a large-cap stock is a market leader.
Higher interest rate environment is good for the banks
The stock has seen a big "Trump Bump" now if the economy gets one too this stock will continue to move higher.
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The Recent Numbers
I like to do a review of the most recent quarter for stocks that I highlight as Bulls of the Day. BAC reported the September 2016 quarter back in mid October.
The most recent quarter was a beat on top and bottom. The company posted EPS of $0.41 when the Zacks Consensus Estimate was calling for $0.34. That translates into a positive earnings surprise of 20.6%.
Revenue came in $836M ahead of expectations for a 4% positive revenue surprise. As a result, the stock was bid up by more than 1.6% in the session following the report.
Description
Bank of America is a financial services company. Bank of America Corp was founded in 1874 and is based in Charlotte, North Carolina.
Earnings History
The company has a strong history of beating the Zacks Consensus Estimate. There has only been one miss in the last six reports. The rest of the reports were all beats.
The chart above show the beats and misses for BAC over the last several years. I see only one miss per year in each of the last three years.
Estimates
The estimate picture looks really good, with the Zacks Consensus Estimate for 2016 moving from $1.27 in September to $1.47 in October.
The 2017 number moved from $1.55 in September to the current level of $1.61.
That same chart from above show the earnings estimates moving higher for 2016 and 2017. This is just what investors want to see.
One More Chart
Let's take a look at one the great features of the Zacks website, you can find this function for every stock on the "Financial Overview" section. You can chart all sorts of things against, well all sorts of things but I like to chart them against the stock price.
For BAC, and any bank, it is helpful to think about the ROA and how the stock has traded with the quarterly movement in that measure.
To me, a higher interest rate environment will likely boost ROA and the stock seems to follow that trend.
by Brian Bolan
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