Bank of America is not the Bank of Opportunity
Written by: Jim Van Meerten
07/27/12 - 11:43 AM EDT
Tickers in this article:
JPM C BAC WFC
Its Global Wealth & Investment Management segment provides brokerage, banking, and retirement products; wealth structuring, investment management, trust and banking needs, and asset management services; and institutional and personal retirement solutions.
As of May 12, the company served customers through a network of 5,700 banking centers, 17,750 ATMs, call centers, and online and mobile banking platforms. Bank of America Corporation was founded in 1874 and is based in Charlotte, N.C. (Yahoo Finance profile)
Factors to consider:
Barchart technical indicators:
56% Barchart technical sell signal Trend Spotter sell signal Trading below its 20-, 50- and 100-day moving averages Lost 7.59% in the last month Lost 12.97% in the last quarter 28.91% off its one-year high Relative Strength Index 41.93 Barchart computes a technical support level at 7.04 Recently traded at 7.18 which is below its 50 day moving average of 7.48 Fundamental factors:
Wall Street doesn't like to criticize Wall Street and BAC through its ownership of Merrill Lynch is a big player on Wall Street so here is where I think the analysts have it wrong 26 Wall Street brokerage firms have assigned 32 analysts to make recommendations on BAC They project revenue will decrease by 3% this year and only increase by 2.1% next year Although earnings increases are estimated to be 5,500.00% this year and 66.1% next year, the five-year annual compounded rate of increase is only expected to be 7.85% In spite of these lackluster revenue and earnings projections analysts still issued three strong buy, seven buy, nine hold , two underperform and only one sell recommendation The balance sheet is only a B financial strength rating - not very good for one of the largest banks in the world The P/E is 7.6 compared to the markets P/E of 14.6 The dividend rate is .57%, which is only 14% of expected earnings but below the market's dividend rate of 2.4% Analysts still look for a total annual rate of return of 18% to 22% for investors over the next five years The good news is the bank's costs of funds rates are low The bad news is they are still in the midst of a mortgage repurchase plan for bad mortgages they sold investors, consumer loans balances are still falling and investment yields continue to have low returns