Bank of America (NYSE:BAC) Shares Gap Down on Disappointing Earnings

Bank of America Corporation (NYSE:BAC)’s share price gapped down before the market opened on Wednesday after the company announced weaker than expected quarterly earnings. The stock had previously closed at $53.96, but opened at $49.83. Bank of America shares last traded at $49.3630, with a volume of 21,811,987 shares traded.

The financial services provider reported $1.08 earnings per share for the quarter, missing the consensus estimate of $1.10 by ($0.02). Bank of America had a return on equity of 12.20% and a net margin of 17.56%. The company had revenue of $29.96 billion for the quarter, compared to analyst estimates of $30.58 billion. During the same period last year, the firm earned $1.06 EPS. The firm’s revenue for the quarter was up 3.2% compared to the same quarter last year.

Bank of America Increases Dividend

The company also recently announced a quarterly dividend, which was paid on Friday, September 25th. Investors of record on Friday, September 4th were paid a $0.32 dividend. This is a boost from Bank of America’s previous quarterly dividend of $0.28. This represents a $1.28 annualized dividend and a dividend yield of 2.6%. The ex-dividend date of this dividend was Friday, September 4th. Bank of America’s dividend payout ratio (DPR) is 29.36%.

More Bank of America News

Here are the key news stories impacting Bank of America this week:

• Positive Sentiment: Net interest income increased 8% year over year to $16.4 billion, while average deposits rose 2% to $2.02 trillion and average loans and leases grew 6% to $1.23 trillion. Consumer Banking revenue increased 4%, and Global Wealth and Investment Management revenue climbed 13%. Bank of America segment growth article
• Positive Sentiment: Bank of America returned $8.3 billion to shareholders during the quarter, including $6.0 billion in share repurchases and $2.2 billion in common-stock dividends. Revenue still rose about 3.2% year over year to approximately $30.0 billion. Bank of America third-quarter results
• Neutral Sentiment: The quarter included a $1.3 billion provision for credit losses and $1.3 billion in net charge-offs. These figures may keep investor attention on consumer and commercial credit quality, even as loan growth remains healthy. Bank of America credit-loss provision article
• Negative Sentiment: U.S. regulators imposed roughly $1.2 billion in penalties over anti-money-laundering and sanctions-compliance failures. Regulators said Bank of America failed to report more than $5 billion in suspicious transactions; the charge is non-tax-deductible and reduced quarterly earnings by approximately $0.17 per share. Bank of America Treasury penalty article
• Negative Sentiment: Reported diluted EPS was $0.91, or $1.08 on a non-GAAP basis, below the $1.10 analyst consensus. Revenue also fell short of expectations, while disappointing trading and investment-banking performance added to the earnings pressure. BofA third-quarter earnings article

Analysts Set New Price Targets

Several analysts have issued reports on the stock. Morgan Stanley reaffirmed an “overweight” rating on shares of Bank of America in a research report on Tuesday, September 15th. Jefferies Financial Group decreased their price objective on shares of Bank of America from $75.00 to $70.00 and set a “buy” rating for the company in a research report on Thursday, September 24th. Wells Fargo & Company lifted their price objective on shares of Bank of America from $67.00 to $69.00 and gave the company an “overweight” rating in a research report on Wednesday, July 15th. Truist Financial lowered their price objective on shares of Bank of America from $65.00 to $62.00 and set a “buy” rating on the stock in a research note on Thursday, October 1st. Finally, Evercore set a $62.00 target price on shares of Bank of America in a report on Thursday, October 1st. Nineteen equities research analysts have rated the stock with a Buy rating and seven have assigned a Hold rating to the stock. According to data from MarketBeat.com, Bank of America has an average rating of “Moderate Buy” and an average price target of $64.22.

Institutional Inflows and Outflows

A number of institutional investors have recently made changes to their positions in BAC. First Citizens Bank & Trust Co. raised its stake in Bank of America by 40.2% in the 3rd quarter. First Citizens Bank & Trust Co. now owns 436,787 shares of the financial services provider’s stock valued at $23,774,000 after acquiring an additional 125,331 shares during the period. Fearless Solutions LLC dba Best Invest boosted its position in Bank of America by 42.3% during the third quarter. Fearless Solutions LLC dba Best Invest now owns 7,275 shares of the financial services provider’s stock worth $396,000 after purchasing an additional 2,163 shares during the period. Focus Financial Network Inc. boosted its position in Bank of America by 24.8% during the third quarter. Focus Financial Network Inc. now owns 63,157 shares of the financial services provider’s stock worth $3,438,000 after purchasing an additional 12,565 shares during the period. JM2 Capital Inc. increased its holdings in shares of Bank of America by 94.9% in the third quarter. JM2 Capital Inc. now owns 15,642 shares of the financial services provider’s stock valued at $851,000 after purchasing an additional 7,618 shares during the last quarter. Finally, Stone Summit Wealth LLC increased its holdings in shares of Bank of America by 43.0% in the third quarter. Stone Summit Wealth LLC now owns 18,306 shares of the financial services provider’s stock valued at $996,000 after purchasing an additional 5,506 shares during the last quarter. 70.71% of the stock is owned by institutional investors and hedge funds.

Bank of America Stock Performance

The stock has a market capitalization of $347.39 billion, a price-to-earnings ratio of 11.39, a P/E/G ratio of 0.88 and a beta of 1.21. The company’s fifty day simple moving average is $59.75 and its 200 day simple moving average is $56.67. The company has a quick ratio of 0.82, a current ratio of 0.83 and a debt-to-equity ratio of 1.23.

About Bank of America

Bank of America Corporation (NYSE:BAC) is a diversified financial services company serving individual consumers, small businesses, middle-market companies and large corporations. Its principal businesses include consumer banking, wealth and investment management, commercial banking, corporate and investment banking, and sales and trading.

Through its banking and financial services businesses, the company offers deposit accounts, credit cards, mortgages, home equity products, consumer and business loans, payment services, treasury management, brokerage services and investment advice.