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

Bank of America Corporation (NYSE:BAC) shares 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 changing hands.

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

Bank of America Increases Dividend

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

Key Stories Impacting Bank of America

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

Analyst Upgrades and Downgrades

A number of equities analysts have recently weighed in on the company. Argus set a $70.00 target price on Bank of America in a research note on Wednesday, July 15th. Jefferies Financial Group reduced their price target on Bank of America from $75.00 to $70.00 and set a “buy” rating for the company in a research note on Thursday, September 24th. UBS Group reduced their price target on Bank of America from $70.00 to $67.00 and set a “buy” rating for the company in a research note on Monday, October 5th. Royal Bank Of Canada upped their price objective on Bank of America from $59.00 to $65.00 and gave the company an “outperform” rating in a report on Wednesday, July 15th. Finally, HSBC began coverage on Bank of America in a report on Monday, September 28th. They set a “buy” rating and a $65.00 target price for the company. Nineteen investment 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, the company has a consensus rating of “Moderate Buy” and an average price target of $64.22.

Institutional Investors Weigh In On Bank of America

A number of hedge funds and other institutional investors have recently made changes to their positions in BAC. Turim 21 Investimentos Ltda. purchased a new stake in Bank of America during the second quarter valued at about $25,000. Abound Financial LLC purchased a new position in shares of Bank of America in the fourth quarter worth about $26,000. Cherry Tree Wealth Management LLC increased its stake in shares of Bank of America by 167.6% in the second quarter. Cherry Tree Wealth Management LLC now owns 479 shares of the financial services provider’s stock worth $27,000 after purchasing an additional 300 shares in the last quarter. Principia Wealth Advisory LLC increased its stake in shares of Bank of America by 69.9% in the second quarter. Principia Wealth Advisory LLC now owns 530 shares of the financial services provider’s stock worth $30,000 after purchasing an additional 218 shares in the last quarter. Finally, Vermillion Wealth Management Inc. raised its position in shares of Bank of America by 199.1% in the first quarter. Vermillion Wealth Management Inc. now owns 658 shares of the financial services provider’s stock valued at $32,000 after purchasing an additional 438 shares during the period. 70.71% of the stock is currently owned by institutional investors and hedge funds.

Bank of America Trading Down 7.9%

The firm’s 50-day moving average price is $59.75 and its 200-day moving average price 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. The company has a market cap of $347.39 billion, a P/E ratio of 11.39, a price-to-earnings-growth ratio of 0.88 and a beta of 1.21.

Bank of America Company Profile

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.