Bank of America (BAC) – stock analysis

We will analyze this stock based on several points and give PASS or FAIL grade depending on

specific criterion. You need to be careful when you see a FAIL grade.

Revenue

Revenue was $115,074(m) in 2011 fiscal year.

But it DECREASED to $100,078(m) in 2012 fiscal year.

In September 2012 fiscal quarter, revenue was $24,466(m).

BUT it INCREASED to $24,646 in September 2013 fiscal quarter.

Revenue was NOT consistently increasing. This means the company was NOT consistently

growing.

But it was making money in recent times.

Score: PASS

Earnings per Share (EPS)

EPS was $0.01 in 2011 fiscal year.

But it INCREASED to $0.25 in 2012 fiscal year.

In September 2012 fiscal quarter, EPS was 0.

BUT it INCREASED to $0.2 in September 2013 fiscal quarter.

EPS is increasing. Since they are earning more, it is expected the company should be able to

share more money with stock holders.

Score: PASS

After Tax Return on Equity (ROE)

It was 1% in 2010.

It was the same in 2011.

But it increased to 2% in 2012.

Though it did NOT increase in 2011, it did not perform worse either.

After tax ROE is increasing in recent times and it is a good sign.

Score: PASS

Recommendations

It has been recommended by the experts to buy.

Score: PASS

Earnings Surprises

Companies announce their earnings every quarter. Before such announcements, stock analysts

make prediction on the earnings per share (EPS).

If we check the last 4 (four) quarterly earnings surprise history, we see that it failed last time.

This means it has FAILED to meet the expectations at least once.

Score: FAIL

Forecast

Dec 2014: 1.35

Dec 2015: 1.62

Dec 2016: 1.87

Dec 2017: 2.07

The consensus EPS forecast numbers are increasing year over year.

So, the stock passes this criterion.

Score: PASS

Earnings Growth

The long term 5-year earnings growth number indicates the expectations of market analysts

about the earnings growth per year for the next five years.

The number is 8.25% which is more than our required 8%.

Score: PASS

PEG Ratio

If a company is not growing, the value of a stock may not rise. Many investors look for low P/E

ratio stocks. Of course low P/E is a good sign. But we must carefully examine PEG ratio to

include company's growth in our analysis.

PEG ratio is 1.50 which is not less than 1.0.

This indicates the company is not growing very well. The company may find it hard to pay

earnings in the future.

Score: FAIL

Industry Earnings

We need to check how the overall industry of this company is performing. Because it is a good

sign if the company earns more than the average earning of the overall industry. So, we will

compare this company's earnings to the average earnings of companies in the industry.

The average industry earning is 12.70.

This company's earning is 12.36 and it is lower than the average industry earning. This is NOT a

good sign.

Score: FAIL

Days to Cover

The short ratio (or short interest ratio, SIR) for a public company is a metric signaling prevailing

investors' sentiment. The ratio is calculated by dividing the number of shares sold short by the

average daily trading volume, generally over the last 30 trading days. The ratio represents the

number of days it takes short sellers on average to repurchase all the borrowed shares. The ratio

is used by both fundamental and technical traders to identify trends.

The short interest ratio can also be calculated for entire exchanges to determine the sentiment of

the market as a whole. If an exchange has a high short interest ratio of around five or greater, this

can be taken as a bearish signal, and vice versa.

To find the ratio, we divide short interest stocks by average trading volume of stocks.

The ratio is 1.0 which is less than 2.0. So, the days to cover ratio is fine and indicates that

investors are interested in buying this stock.

Score: PASS

Insider Trading

Insider trading is the trading of a public company's stock or other securities (such as bonds or

stock options) by individuals with access to non-public information about the company. If the

managers are confident in this company, they will buy the stocks of this company. When insiders

are buying, it is a good sign.

Net insider activity is -37,897 which is NOT positive. This indicates money managers in the

industry are NOT highly interested in this stock.

Score: FAIL

Weighted Alpha

Everyone wants to buy a stock that is increasing in value. When you see a positive Weighted

Alpha, it means the stock price is moving higher. A negative Weighted Alpha means the stock

price is moving lower.

Weighted Alpha is +44.30.

The number is positive. So, it passes our criterion.

Score: PASS

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