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Bank of America: Economic Growth Winner

Stocks in this article: BAC I:BKX

Heading into the new year, Bank of America's long-suffering shareholders are looking for a significant capital return, following the next round of Federal Reserve stress tests, with many analysts expecting the company to restore a meaningful dividend, as well as being approved to buy back common shares. Atlantic Equities analyst Richard Staite pointed out on Dec. 13 pointed out that the company had met its fully phased-in Basel III Tier 1 common equity ratio requirement of 9.0% as of Sept. 30, many years in advance, and estimated the company would be approved to pay out $2 billion in dividends on common shares in 2013, while buying back $4 billion worth of shares.

State rates Bank of America "Overweight" with a $12 price target, and is out in front of the consensus, estimating the company will earn $1.23 a share in 2013, with EPS increasing to $1.53 in 2014.

Oppenheimer analyst Chris Kotowski has a different view, rating Bank of America "Market Perform," while trailing the consensus with a 2013 EPS estimate of 79 cents.

Kotowski on Thursday said in a report that "our lower revenue assumptions are offset by lower expenses because we assume that the improvement in the housing market, and primarily the drop in foreclosures, will be a tailwind for BAC's expense initiatives, especially in the back half of 2013. Overall, our 2013 estimates are about 18% below consensus, but we believe this is largely cosmetic as our pre-provision earnings estimates are in line but our reserve release assumptions are lower."

BAC Chart BAC data by YCharts

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

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-- 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 TheStreet.com 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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