- Shares of JPMorgan Chase (JPM) closed at $52.30 Friday, trading for 8.8 times the consensus 2014 EPS estimate of $5.94.
- Citigroup (C) closed at $51.45, trading for 9.7 times the consensus 2014 EPS estimate of $5.32.
- Morgan Stanley (MS) closed at $25.19, trading for 9.9 times the consensus 2014 EPS estimate of $2.54.
- Goldman Sachs (GS) closed at $158.18, trading for 10.4 times the consensus 2014 EPS estimate of $15.27.
- Wells Fargo (WFC) closed at $39.88, trading for 10.5 times the consensus 2014 EPS estimate of $3.81.
Looking forward, investors are expecting Bank of America to achieve very significant cost savings as mortgage loan quality continues to improve, repossessed property inventory declines and loan servicing staffs are trimmed. Investors expect additional efficiencies through the company's "Project New BAC" cost-cutting program. Mutascio estimates that Bank of America can eventually hit $1.80 a share in "normalized" annual earnings, however, he sees the market currently "applying no material discount to the P/E multiple applied to the normalized EPS earnings, regardless of the time that it takes to achieve." "We are unwilling to use BAC's potential normalized earnings power for a basis of valuation without at least discounting the P/E multiple applied to those earnings for the years we think it will take to get there and the uncertainty of the company's ability to achieve them," Mutascio wrote. "Using this method, we could potentially see a fair value of $14.50 (applying a discounted multiple of 8.0x for timing to normalization and uncertainty of achievability to $1.80), which still would not represent enough upside to warrant an Outperform rating." 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