Stocks of Bank of America (NYSE:BAC) On A Rise

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By Mark Michaels on August 6, 2014 Consumer Staples

Bank of America’s (NYSE:BAC) stocks increased by 2.10 percent and reached to $15.31 as soon as the news of Federal Reserve approving the new capital plan of BAC hit the market. The resubmitted plan focused on showing the Bank’s strong financial position in the market.

Bank of America (NYSE:BAC) submitted its capital plan to Federal Reserve earlier this year. However, once the Bank disclosed that it used the data incorrectly in the plan, Federal Reserve asked for a new plan. It also ordered the Bank to suspend its capital distributions increase that it indicated in the previous plan.

Ratings team at TheStreet gave the stocks of Bank of America (NYSE:BAC) a score of B with a rating of ‘Buy’. When asked about their ratings, the team said that the Bank had a number of strengths that took precedence over its weaknesses. Talking about the strengths of the Bank, the team said that Bank of America (NYSE:BAC) has admirable levels of valuation. It further commented that the Bank has seen a huge growth in its profit margins together with a reasonable ROE (returns on equity). Although the Bank’s net income is not increasing at a remarkable level, but this weaknesses has been overcome by the corporation’s many strengths.

Some other highlights from the Report:

Bank of America’s (NYSE:BAC) gross profit margin is recorded to be at 86.47 percent. Such high margin suggests that the Bank is performing well, especially since the margin has increased considerably when compared with the figures of last year. Net profit margin of the Bank, however, is quite low. It is currently at 9.28 percent, well below the industry average.
The Bank has performed well in the revenue category as well. Although it has seen a decline of 5.1 percent in the revenues, if the figures are compared with the last year’s numbers, but the figures are still above the industry average of 8.2 percent. The earnings have decreased slightly and the bottom line has been affected by this decline in the revenues.
Coming to the ROE of Bank of America (NYSE:BAC), the numbers have improved considerably when compared with the last year’s figures, which can be seen as a strength of the company. However, the Bank has underperformed in Standard & Poor’s stock-index as well as the industry average category due to its comparatively low ROE.
The EPS of Bank of America (NYSE:BAC) decreased by 40.6 percent during its most recent quarter if compared with the same quarter of last year. It will not be wrong to say that the Bank has been reporting somewhat volatile earnings lately. Estimates are that the earnings of the Bank will decrease further in the upcoming year. Last year, the Bank reported earnings of $0.91. As for the next year, estimates are that it will post earnings of $0.80.

Coming to the stock prices of Bank of America (NYSE:BAC), the Bank, on the last trade day, August 6, 2014, opened its shares at a price of $15.14 and closed at a price of $15.20, after hitting the highest figures of $15.36.