NEW YORK (TheStreet) -- Shares of Bank of America (BAC) - Get Report rose 0.89% to $16.95 in afternoon trading Wednesday after chairman and CEO Brian Moynihan told Bloomberg that legal costs tied to the bank's defective mortgages are mostly behind it.
Bank of America has spent more than $70 billion under Moynihan's leadership to take care of issues stemming from the acquisitions of Countrywide Financial and Merrill Lynch that included accords linked to questionable residential mortgage-backed securities, or RMBS.
"If you look at the different components of liability and the amount of settlements, whether it's the RMBS cases, yes, its behind us," Moynihan said. "Embedded in that is often the question, OK that's over, now you can go concentrate on running the company. The answer is, we were running the company."
Separately, TheStreet Ratings team rates BANK OF AMERICA CORP as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate BANK OF AMERICA CORP (BAC) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for BANK OF AMERICA CORP is currently very high, coming in at 86.27%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, BAC's net profit margin of 0.70% significantly trails the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.3%. Since the same quarter one year prior, revenues slightly dropped by 3.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- BANK OF AMERICA CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, BANK OF AMERICA CORP increased its bottom line by earning $0.91 versus $0.25 in the prior year. For the next year, the market is expecting a contraction of 48.4% in earnings ($0.47 versus $0.91).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Commercial Banks industry. The net income has significantly decreased by 93.3% when compared to the same quarter one year ago, falling from $2,497.00 million to $168.00 million.
- You can view the full analysis from the report here: BAC Ratings Report