Bank of America: Economic Winner
NEW YORK (TheStreet) -- Bank of America(BAC) was the winner among the largest U.S. banks on Friday, with shares rising 3.5% to close at $11.71, on signs the U.S. economy is improving.
The KBW Bank Index(I:BKX) climbed 2% to close at 54.73, after the Bureau of Labor Statistics said non-farm payrolls in the U.S. grew by 157,000 during January, which was down from 196,000 in December. The unemployment rate edged up slightly to 7.9% from 7.8%.
Economists, on average, had expected 160,000 non-farm jobs to be added during January, with the unemployment remaining at 7.8%, according to Briefing.com.
A notable item in the Bureau of Labor Statistics report was the significant revisions of previous months' jobs-growth numbers. The number for November was revised to 247,000 from 161,000, while the December number was revised by 41,000 from 155,000. The office said the numbers were "revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors."
While there have been a number of notable disappointments so far this earnings season, FactSet said on Friday that "of the 234 companies that have reported earnings to date for the fourth quarter, 70% have reported earnings above estimates." That percentage has been pretty much the same for the past four quarters, however. FactSet also said that "in terms of revenues, 67% of companies have reported sales above estimates. This percentage is well above the average of 50% recorded over the past four quarters."
Bank of America
Bank of America's shares have had a flat return so far this year, trailing the KBW Bank Index's increase of 7%. But during 2012, Bank of America's stock returned 110%, while the index was up 30%. Bank of America's shares still haven't fully recovered from their epic drop of 58% during 2011. The shares are now down 11% since the end of 2010.
The stock trades for 0.9 times their reported Dec. 31 tangible book value of $13.36, and for 9.2 times the consensus 2014 earnings estimate of $1.28 a share, among analysts polled by Thomson Reuters. The consensus 2013 EPS estimate is 97 cents.