Bank of America Corp (BAC) Will Skyrocket: JPMorgan Chase & Co. (JPM), Citigroup Inc. (C)

Analysis-Validea

According to the analysis of Validea, a renowned stock analysis company, Bank of America has a buy rating of 57%; the financial company passes all but seven aspects of the formula, all though it fails some it passes the major ones such as institutional ownership. Institutional ownership is good here because they own more than 50% of the stock; however, please do keep in mind that this is one person, and this may not be true. There are many other analysts that disagree with Validea, and believe that Bank of America is a 100% buy, and is at a very good price, and some there are others that believe it is a 100% sell. Looking at Bank of America’s Fundamentals, it has several positives. The company has a forward P/E of about 9, it has a net profit margin of 5%, and it is trading for approximately 50% of book value. Bank of America’s EPS is expected to rise more than 30%. With all of these factors Bank of America will be able to capture back its market share.

Fundamentals

Bank of America Corp (NYSE:BAC) is no longer on the verge of bankruptcy. Bank of America’s balance sheets look good according to their quarterly report. They are working on paying off long term debt; they now have $282 billion in long term debt. This means that each dollar of revenue is costing them less in interest expense, obviously meaning that they can become more profitable. From this point of view Bank of America is not slowing down, in fact it is gaining traction every day. Bank of America’s current target price is $15/share, which is about $3.5/share away from where it is out now. Although, Bank of America’s revenue has gone massively down within the last three years, analysts and the bank are predicting that the bank’s earnings will skyrocket. Bank of America’s total liabilities also fell by about $150 billion, this is due to a decrease in accounts payable. Another side note is, Bank of America has the largest discount to the book value of its equity compared to other banks. As a whole, Bank of America’s fundamentals have improved five-fold, and are going to continue to improve.

Conclusion

Going forward Bank of America should be a solid financial company to invest in, with its golden income statement and its estimated EPS. This company should be a safe bet; however, there still might be some other risk factors involved such as major litigations, and other fraud related lawsuits. Also please keep in mind that Bank of America has rallied on the fact that it won most of its lawsuits, its major win was the Afiliated Fund Use lawsuit, where it was being accused of violating employee rights; however, if another one arises then Bank of America would be back where it started at in 2009.

The article Bank Of America Will Skyrocket originally appeared on Fool.com and is written by Shazir Mucklai.

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