With home prices continuing to rise and with so much progress being made working through nonperforming mortgage loans, Bank of America expects its annual Legacy Asset Servicing (LAS) expenses to decline by $7.2 billion through the end of 2015, from second-quarter levels.
Because of the expected normalization of Bank of America's earnings, analysts polled by Thomson Reuters on average expect to see the company's earnings grow from a consensus estimate of 92 cents a share this year, to $1.38 in 2014 and to $1.62 in 2015.
The consensus estimates don't show anywhere near that sort of earnings growth potential for the rest of the "big four" U.S. banks, which also include Wells Fargo, JPMorgan Chase and Citigroup (C).
Based on 2014 earnings estimates, it would seem that Bank of America's expected earnings improvement is "baked-in." At Wednesday's market close, the shares traded for 10.5 times the consensus 2014 EPS estimate of $1.36. Shares of Wells Fargo -- the strongest earnings performer among the "big four in the aftermath of the credit crisis -- closed at $41.50 Wednesday and traded for 10.3 times the consensus 2014 EPS estimate of $4.02.Shares of Citigroup closed at $49.60 Wednesday and traded for 9.1 times the consensus 2014 EPS estimate of $5.46. The cheapest name among the "big four" is JPMorgan, with shares trading for just 8.5 times the consensus 2014 EPS estimate of $6.11, when they closed Wednesday at $51.87. There's no question that investors are applauding Brian Moynihan for a job well done, and after expenses are finally normalized, Bank of America can once again focus on growing its business. BAC data by YCharts
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. Follow @PhilipvanDoorn
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV