NEW YORK ( TheStreet Ratings) -- We rate Bank of America (BAC - Get Report) a "HOLD." The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.
The company's strengths can be seen in multiple areas, such as its expanding profit margins and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally poor debt management and disappointing return on equity.
The gross profit margin for Bank of America is rather high; currently it is at 61.10%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -4.40% is in-line with the industry average.
Bank of America reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, Bank of America reported poor results of -$0.38 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($1.30 versus -$0.38).Bank of America, with its decline in revenue, underperformed when compared the industry average of 6.8%. Since the same quarter one year prior, revenues slightly dropped by 9.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share. The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Diversified Financial Services industry and the overall market on the basis of return on equity, Bank of America underperformed against that of the industry average and is significantly less than that of the S&P 500. The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Diversified Financial Services industry. The net income has significantly decreased by 541.2% when compared to the same quarter one year ago, falling from -- $194.00 million to -- $1,244.00 million.