Summary: OVERPRICED
Score: 2/20
MOS: 29%
Share Price: $26
Sticker Price: $38
Is Bank of America a good buy?
Bank of America is the second-largest bank in the US behind JPMorgan Chase. They were founded in 1998 as a result of a merger between BankAmerica and NationsBank. They’re based out of Charlotte, NC and currently have over 200,000 employees.
Large bank stocks have not been hot buys this year. Barrons recently published an article stating the Fed has capped bank dividends and suspended buybacks. Capping a dividend I don’t agree with. A business should be able to offer whatever dividend they want, as long as they can payout the dividends. As for the suspending of share buybacks, that’s a good call. Long story short, some businesses will buy back shares which can artificially inflate the EPS (earnings per share) and the EPS is a key metric used to factor the financial health of a business. In other words, buybacks can mask financial issues within a company.
Overall, these limitations have not helped these stocks…
- Bank of America is down 26% this year
- JPMorgan Chase is down 27% this year
- Wells Fargo is down down 50% this year
Unfortunately, these large bank stocks reside in a lot of mutual funds, index funds, and ETFs (Exchange Traded Funds). In this case, these stocks are holding back your returns.
With a score of 2/20, the financials are very scary. Although there is a small discount with a share price of $26 vs a sticker price of $38, the score makes this stock too much of a risk.
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