Rating Change #1
Bank Of America Corporation (BAC - Get Report) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 19.9%. Since the same quarter one year prior, revenues rose by 10.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- BANK OF AMERICA CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, BANK OF AMERICA CORP continued to lose money by earning -$0.02 versus -$0.38 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus -$0.02).
- The gross profit margin for BANK OF AMERICA CORP is currently very high, coming in at 75.50%. 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 6.40% trails the industry average.
- BAC's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 43.39%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The debt-to-equity ratio is very high at 2.71 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.
Bank of America Corporation, through its subsidiaries, provides banking and financial services to individuals, small- and middle-market businesses, corporations, and governments primarily in the United States and internationally. The company has a P/E ratio of 24.6, below the average banking industry P/E ratio of 729 and above the S&P 500 P/E ratio of 17.7. Bank of America has a market cap of $73.89 billion and is part of the financial sector and banking industry. Shares are up 44.6% year to date as of the close of trading on Tuesday.You can view the full Bank of America Ratings Report or get investment ideas from our investment research center. -- Reported by Kevin Baker in Jupiter, Fla.
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