Bank of America: Still Undervalued Despite A Great YTD Performance


  • Bank of America, together with other major retail banks, has outperformed both the S&P 500 and the S&P Banks index over the past year.
  • Currently, BAC is exhibiting a trend of lower NII from a year ago, but non-interest income has picked up again, primarily due to higher S&T and IB activities.
  • Charge-offs have been increasing from previous quarters due to higher delinquency rates in credit cards, coupled with the credit crisis in the commercial real estate space.
  • Based on a dovish monetary policy that will likely reduce the cost of funding and a DDM model with an elevated margin of safety, I assign BAC a buy rating.

Street view on Bank of America branch in NYC with people waiting, pedestrians crossing, crosswalk, bike, road in Manhattan


Bank of America (NYSE:BAC) is one of the major retail banks in the US, and through their four business segments, they managed to generate $93.359 billion in TTM revenue, $25.028 billion in net income, and

Discount Rate Risk free rate Beta Equity Risk Premium
8.89% 4.28% 1.12 4.12%
Growth Rate ROE Retention Ratio
6.85% 9.79% 70.01%
Dividend 1 E Dividend FY24 E Dividend FY25
$1.04 $1 $1.07
Upside Price Intrinsic Value
+26.93% $39.96 $50.72

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in BAC over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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