Banking & Finance

What to Expect When Bank of America Reports Wednesday Morning

Bank of America Corp. (NYSE: BAC) is scheduled to release its third-quarter financial results before the markets open on Wednesday. The consensus estimates are calling for $0.51 in earnings per share (EPS) and $22.79 billion in revenue. The same period of last year reportedly had $0.66 in EPS and $22.93 billion in revenue.

Bank of America is a slow and steady grower at this stage, now that it’s in the top four banks by assets in America. It has Warren Buffett in its corner, as its largest single shareholder is Berkshire Hathaway, with a huge investment in the company.

The bank is growing its dividends again, and its businesses of bank deposits, lending, credit cards and mortgages are spread out, along with the asset management and investment operations of Merrill Lynch. Its core earnings remain healthy.

However, banks face lower net interest margins now that interest rates have come down and since the yield curve is so flat. Bank of America also has massive deposits and the Merrill Lynch investment advisory unit that could come under focus if politicians deliver on their threats to break up the big banks. The Federal Reserve also has allowed bank dividends to rise enough that some investors might want them to keep some powder dry so they don’t have a risk of having to lower their dividends if the economy keeps slipping lower.

Excluding Tuesday’s move, Bank of America had performed more or less in line with the broad markets, with its stock up about 18.3% year to date. In the past 52 weeks, the stock was actually up only 2.8%.

A few analysts weighed in on Bank of America ahead of the report:

  • JPMorgan has an Overweight rating with a $30 price target.
  • Morgan Stanley has an Overweight rating with a $31 price target.
  • Keefe Bruyette & Woods has a Market Perform rating with a $29 target.
  • Raymond James has a Market Perform rating.
  • Wells Fargo has a Buy rating and a $34 price target.
  • DZ Bank has a Hold rating.

Shares of Bank of America traded up over 2% on Tuesday to $29.92, in a 52-week range of $22.66 to $31.17. The consensus price target is $32.78.