Bank of America (BAC) Stock Down Today as Lower Fourth Quarter Trading Revenue Expected

NEW YORK (TheStreet) -- Shares of Bank of America Corp. (BAC) are down 1.9% to $17.33 after it was reported that the bank said it expects trading revenue to decline this quarter from the previous three months and a year earlier, according to Bloomberg.

The drop is consistent with customer activity, CEO Brian Moynihan noted at a conference hosted by Goldman Sachs today in New York, Bloomberg reports, adding the bank said in a presentation that trading is among its "revenue headwinds" after generating $3.27 billion in the third quarter and $2.97 billion in the fourth quarter of last year.

"When activity ebbs and flows, we don't try to replace that activity with non-customer-driven business," Moynihan said, according to Bloomberg.

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 some important positives, 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 increase in stock price during the past year. 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. Regardless of the strong results of the gross profit margin, the net profit margin of -0.97% is in-line with the industry average.
  • BAC, with its decline in revenue, slightly underperformed the industry average of 1.3%. 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.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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 49.5% in earnings ($0.46 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 109.3% when compared to the same quarter one year ago, falling from $2,497.00 million to -$232.00 million.
  • You can view the full analysis from the report here: BAC Ratings Report

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