Bank of America Has Gotten Expensive

NEW YORK ( TheStreet) -- The last time I discussed Bank of America ( BAC), I told you the stock was fairly priced. I didn't see the justification for more gains, even though I was willing to look at the glass-half-full side of the story.

Since then, however, the stock has shot up an additional 12% and breaking that all-important $15 mark last week.

Look, I'm not blaming Bank of America. Other than smiling and saying "thank you," there's not much a company can do when the Street falls in love with its stock. While Bank of America has certainly become a pleasant turnaround story, I can't say that the stock, which closed Wednesday at $14.60, makes sense at this level -- not at a P/E of 31, which is more than three times that of JPMorgan Chase ( JPM).

I'm not saying Bank of America's growth is not impressive. In fact, I've said on more than one occasion that the pace of Bank of America's recovery was faster than it had fallen. But I don't believe that investors who are enamored with Bank of America's notable growth truly appreciate the depths the bank had reached. To say it another way, the giant leaps are indeed remarkable. But it's also because Bank of America was so far behind.

What's more, when compared to the likes of Wells Fargo ( WFC), the deficits Bank of America still has to work with become more noticeable, including fee income, which was down 4% in the recent quarter due to lower trading. Granted, Bank of America's 6% growth in operating revenue was 5% better than Wells Fargo's, but the bank also posted a 1% sequential decline in net interest income.

I won't disagree that there are still plenty of legacy issues impacting upon Bank of America's performance. But the same explanation can't be used to justify the premium the stock price commands, not when net interest margin (NIM) and earnings assets are underperforming. What's more, it also looks as if JPMorgan is outperforming Bank of America in mortgage originations.

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