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Bank of America is slated to release its Q4 and full-year 2019 results on January 15, 2020. For FY 2019, Trefis estimates that the company will report:Revenues would marginally decrease to $91.2 billion primarily due to an expected drop in sales & trading revenues and all other segment. Further, it is slightly lower than the consensus estimate of $91.6 billion.EPS figure would improve to $2.70 primarily due to the expected drop in outstanding shares as compared to the previous year, however, the net income margin would shrink due to higher expenses. Further, the EPS figure would still be lower than the consensus estimate of $2.71.
We believe that weaker-than-expected revenues and earnings for FY 2019 could result in a slight negative movement in the Bank of America's stock price once earnings are announced. However, it should correct itself in the near term, as our forecast indicates that Bank of America's valuation is $35 a share, which is roughly at the same level as its current price.
(1) Revenues expected to be slightly below consensus estimates
Trefis estimates Bank of America's 2019 revenues to be $91.2 billion, slightly below the consensus estimate of $91.6 billion
Trefis Estimate of Total Revenues
(1) Consumer Banking $38.2 Bil (42%)
(2) Wealth Management $19.7 Bil (22%)
(3) Corporate & Commercial Banking
$16.8 Bil (18%)
(4) Sales & Trading $12.9 Bil (14%)
(5) Advisory & Underwriting Services
$5.7 Bil (6%)
(6) All Other -($2.1) Bil (-2%)
TOTAL $91.2 Bil
Consensus $91.6 Bil
Surprise -($0.45) Bil
(2) EPS likely to narrowly miss consensus estimates
Bank of America's 2019 earnings per share (EPS) expected to be $2.70 per Trefis analysis, -0.5% lower than the consensus estimate of $2.71 per share
EPS - 2019E
Total Revenues $91.2 Bil
- Total Expenses $66.1 Bil(*)
Net Income $25.1 Bil (**)
÷ Shares Outstanding 9.3 Bil
(*) - The expense figure includes preferred dividend and other minority expenses
(**) - Numbers don't add up due to rounding
(3) Stock price estimate is almost same as the market price
Trefis forecast for Bank of America's 2019 earnings is slightly lower than the market expectations, however, P/E multiple is marginally ahead. This works out to a fair value of $35 for Bank of America's stock which is at the same level as the current market price of around $35.
Bank of America's Share Price [= A x B]
EPS - 2019E [A]
Trailing P/E Multiple [B]
Bank of America Stock (NYSE:BAC)Bank of America Revenues: How Does Bank of America Make Money?All Trefis Industrials Company data
Detail about our forecast for Bank of America's (1) Revenues, (2) EPS, and (3) P/E Multiple follow:
Notably, we expect Bank of America's revenue growth to slow down in the coming years, leading it to cross $92 billion by 2020.
Our interactive dashboard analysis, How Does Bank of America Make Money?, provides an in depth view of the company's revenues along with our forecasts and a comparison of trends with peers JPMorgan, Citigroup and Wells Fargo.
For 2020, we believe that slight growth in revenues coupled with lower expenses will result in the adjusted net income margin figure increasing to 28.8%
Our interactive dashboard analysis, How Does Bank of America Spend Its Money, provides an in-depth view of the company's expenses.
(3) A trailing P/E multiple of 12.9x looks appropriate for Bank of America's stock, which is marginally higher than the current implied P/E multiple of 12.8x
We use our full cash flow model for Bank of America to arrive at a P/E multiple of 12.9x for a price estimate of $35
Note: P/E Multiples are based on Share Price at the end of the year, and reported (or expected) Adjusted Earnings for the full year
P/E Multiple BAC
P/E Multiple Citigroup
P/E Multiple Goldman
P/E Multiple JPM
1. How to save your forecasts for Bristol-Myers Squibb:
Click on the blue "Try Trefis" button in the header to create an account, then navigate back to this dashboard. Now, any changes you make to these inputs will be auto-saved as a scenario (see left panel of dashboard).
2. How to monitor your scenario vs. actual results
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