NEW YORK (
) 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 expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally poor debt management and a generally disappointing performance in the stock itself.
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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 ($0.55 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.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 23.2%. Since the same quarter one year prior, revenues fell by 18.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- BAC has underperformed the S&P 500 Index, declining 24.14% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The debt-to-equity ratio is very high at 2.66 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.
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 5.5, below the average banking industry P/E ratio of 7.5and below the S&P 500 P/E ratio of 17.7. Bank of America has a market cap of $75.87 billion and is part of the
industry. Shares are up 27.2% year to date as of the close of trading on Wednesday.
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--Written by a member of TheStreet Ratings Staff.
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.