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Bank of America to Fall Off Cliff, Then Bounce: Analyst

Bank of America could also be especially sensitive to a prolonged fiscal cliff drama because of the stock's valuation. The shares were up 79% year-to-date when they closed at $9.90 Friday, following a 58% decline last year. While the shares look cheap at 0.7 times their reported Sept. 30 tangible book value of $13.48, they trade for more than 10 times the consensus 2013 earnings estimate of 97 cents a share, among analysts polled by Thomson Reuters, which is relatively pricey, when compared to the rest of the "big four" U.S. banks:

  • Shares of Citigroup (C - Get Report) closed at $36.03 Friday, returning 37% year-to-date, after dropping 44% in 2011. The shares trade for 0.7 times their reported Sept. 30 tangible book value of $52.70, which is a similar valuation to Bank of America. However, the shares have a much lower forward P/E ratio, trading for 7.8 times the consensus 2013 EPS estimate of $4.64.
  • Shares of JPMorgan Chase (JPM - Get Report) closed at 41.09 Friday, returning 27% year-to-date, following a 20% decline last year. The shares trade for 1.1 times tangible book value, according to Thomson Reuters Bank Insight, and for 7.7 times the consensus 2013 EPS estimate of $5.32.
  • Wells Fargo (WFC - Get Report) closed at $33.20 Friday, returning 24% year-to-date, following a decline of 10% during 2011. The shares trade for 1.6 times tangible book value, according to Thomson Reuters Bank Insight, and for 9.2 times times the consensus 2013 EPS estimate of $3.63

Interested in more on Bank of America? See TheStreet Ratings' report card for this stock.


-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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