Bank of America (BAC) Stock Lower Following $205 Million Fine

NEW YORK (TheStreet) -- Shares of Bank of America Corp  (BAC) were declining, lower by 0.24% to $16.73 in midday trading Wednesday, after the Fed fined the bank $205 million for unsound practices in foreign exchange, according to Reuters.

Still, Bank of America didn't face similar action from the Justice Department as the five global banks did, including J.P. Morgan Chase & Co. (JPM), Barclays PLC (BCS), Royal Bank of Scotland Group PLC (RBS), Citigroup  (C), and UBS (UBS).

They have agreed to pay more than $5 billion in combined penalties to resolve an investigation into whether they moved foreign currency rates to their benefit, The Wall Street Journal reports.

On Monday night, Bank of America won a dismissal of claims in lawsuits accusing them of failing to safeguard interests of investors, Bloomberg reported.

U.S. District Judge Katherine B. Forrest in Manhattan threw out three lawsuits alleging breaches over mortgage-backed securities that suffered losses tied to the global financial crisis, Bloomberg added.

Charlotte, N.C.-based Bank of America is a financial institution, serving individual consumers, small and middle market businesses, institutional investors, large corporations and governments with a range of banking, investing, asset management and other financial and risk management products and services.

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 a few notable strengths, 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 increase in net income, expanding profit margins, increase in stock price during the past year and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 1316.3% when compared to the same quarter one year prior, rising from -$276.00 million to $3,357.00 million.
  • The gross profit margin for BANK OF AMERICA CORP is currently very high, coming in at 86.18%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, BAC's net profit margin of 14.15% significantly trails the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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 reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BANK OF AMERICA CORP reported lower earnings of $0.35 versus $0.91 in the prior year. This year, the market expects an improvement in earnings ($1.33 versus $0.35).
  • BAC, with its decline in revenue, slightly underperformed the industry average of 0.8%. Since the same quarter one year prior, revenues slightly dropped by 6.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: BAC Ratings Report

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