Today’s news: Bank of America (BAC) reports great first quarter results; Comerica (CMA) and Morgan Stanley (MS) set to report first quarter results on April 17 and 18.
Bank of America (BAC – yield 1.6%) reported first quarter earnings per share (EPS) of $0.62 this morning, when the market was expecting $0.59. Numbers were fantastic across the board, including revenue, brokerage assets, loans, net interest income (NIM), efficiency ratio, deposit growth, net charge-offs, branch expansion and more.
CEO Brian Moynihan commented, “Our responsible growth model continues to deliver consistent results. Strong client activity, coupled with a growing global economy and solid U.S. consumer activity, led to record quarterly earnings. We grew loans in our business segments by $45 billion and increased deposits by $41 billion. We continue to invest in new capabilities in our mobile banking app, the expansion and renovation of our financial centers, and the hiring of additional client relationship professionals. We believe these investments, and our focus on operational excellence, will drive sustainable growth over time.”
There’s room for a potential 10% short-term gain as BAC heads back to its March high near 33. At that point, we’ll have achieved a total return of 39% since BAC joined the Growth Portfolio in June 2017. I might then sell in favor of a smaller financial institution, in order to capitalize on legislative changes that are coming from Congress this year. (BAC will still be a great stock to hold longer-term.) Strong Buy.
Comerica (CMA – yield 1.2%) is expected to report first quarter EPS of $1.53, within a range of $1.40 to $1.65, on the morning of April 17. The company is profiting more from rising interest rates in its variable rate loan portfolio than any of its mid-cap bank peers, which could lead to a surprising first quarter increase in net interest margin (NIM). Comerica is a financial services company engaged in domestic and international business banking & lending, wealth management and consumer services. Comerica was featured in the April issue of Cabot Undervalued Stocks Advisor. I’ve been awaiting Comerica’s late-April annual dividend increase, which might be reported in conjunction with quarterly financial results. Watch for a 10%-20% dividend increase. (A 20% increase is my bullish guess, while the last two increases ranged from 11%-15%.) Buy.
Morgan Stanley (MS – yield 1.9%) is expected to report first quarter EPS of $ 1.25, within a range of $1.15 to $1.33, on the morning of April 18. Strong Buy.