Bank Of America Corporation Stock Hold Recommendation Reiterated (BAC)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Bank of America Corporation (NYSE:BAC) has been reiterated by TheStreet Ratings as a hold with a ratings score of C- . The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and weak operating cash flow.

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Highlights from the ratings report include:

• 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 year. 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 ($0.57 versus -$0.02).
• The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Financial Services industry. The net income increased by 127.9% when compared to the same quarter one year prior, rising from -$8,826.00 million to $2,463.00 million.
• Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
• Net operating cash flow has significantly decreased to $18,356.00 million or 64.54% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
• Although BAC's debt-to-equity ratio of 2.66 is very high, it is currently less than that of the industry average.

Bank of America Corporation, through its subsidiaries, provides various banking and financial products and services to individual consumers, small-and middle-market businesses, institutional investors, corporations, and governments in the United States and internationally. The company has a P/E ratio of 6.2, below the average banking industry P/E ratio of 8.2 and below the S&P 500 P/E ratio of 17.7. Bank of America has a market cap of $83.2 billion and is part of the financial sector and banking industry. Shares are up 43.9% year to date as of the close of trading on Friday.

You can view the full Bank of America Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

 

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