Bank of America
Bank of America ( BAC) was up over 3% to close at $11.36. The shares have now returned 105% year-to-date, which is, by far, the best performance among the components of the KBW Bank Index. This recovery followed an epic 58% drop in 2011, as the company's legacy mortgage mess springing mainly from its purchase of Countrywide in 2008 dominated industry coverage. Even with this year's stellar return, the shares are still down 14% since the end of 2010. Bank of America's shares trade for 0.8 times their reported Sept. 30 tangible book value of $13.48, and for 11.8 times the consensus 2013 EPS estimate of 96 cents. The consensus 2014 EPS estimate is $1.25. The shares have certainly been volatile this year, and opinion is divided, with 13 of the 35 sell-side analysts polled by Thomson Reuters rating Bank of America the equivalent of a "Buy," while 19 have neutral ratings and three analysts rate the shares "Underperform" or "Sell." Among the believers is Atlantic Equities analyst Richard Staite, who rates the shares "Overweight" with a $12 price target. Staite estimates that following the completion of the next round of Federal Reserve stress tests in March, Bank of America will be approved to pay out $2.086 billion in dividends during 2013, while repurchasing $4.0 billion worth of common shares. The analyst expects the company's total return of capital during 2014 to be close to $14 billion, including $3.864 billion in dividends and $10.0 billion in buybacks. Staite on Tuesday lowered his fourth-quarter operating earnings estimate for Bank of America by three cents to 17 cents, "to account for the relatively subdued trading environment in November and December." The analyst is way out in front of the consensus, estimating that Bank of America will earn $1.23 a share in 2013, with EPS rising to $1.53 in 2014.
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Goldman's shares have now returned 44% year-to-date, following a 46% decline during 2011. The shares are down 22% since the end of 2010. The shares trade just below their Reported Sept. 30 tangible book value of $129.69, and for 10.1 times the consensus 2013 EPS estimate of $12.68. The consensus 2014 EPS estimate is $14.12. Staite has a neutral rating on Goldman, with a price target of $120 and estimates that the company will report fourth-quarter operating earnings of $2.97 a share. The analyst is slightly ahead of the consensus, estimating the company will earn $12.70 a share in 2013, followed by EPS of $14.30 in 2014. Staite estimates that Goldman Sachs will be approved by the Fed to increase its stock buybacks significantly, from $4.612 billion in 2012, to $7 billion in 2013 and $8 billion in 2014. GS data by YCharts
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