This mega-bank beat analysts’ earnings projections by $0.03 last quarter, leading Wall Street to beat its drums. In the past 30 days, 21 analysts have increased their 2017 forecasts for the company and 13 have boosted their earnings outlook for 2018.
Bank of America (BAC)
From Cabot Undervalued Stocks Advisor
Bank of America (BAC) reported third-quarter earnings per share (EPS) of $0.48 vs. the consensus estimate of $0.45 (or $.46*) and vs. last year’s reported $0.41. (*Note that there are a few sources of consensus estimates, and therefore their numbers can occasionally vary by a penny.) The earnings beat was attributed to higher net interest income (NII) and lower expenses. I think I mentioned a couple of times this year that, among large-cap banks, Morgan Stanley believes that Bank of America is best-positioned to capitalize on rising interest rates. We’re now seeing that in the quarterly results. Lather-rinse-repeat: we’ll probably see interest rates rise for many years to come. I anticipate holding this stock for a long time.
Quarterly expenses came in lower than in many recent years. The company is on-track to meet its 2018 expense target, and the expense ratio surprised on the downside too. We’ll probably see earnings estimates rise again next week, and that’s always bullish news.
I love this stock. It’s got huge profit growth on the horizon, and its recent share price breakout was followed by a small pullback. Buy BAC today, buy it next week, and buy it until I give you the “10% warning.” (That’s when I think a stock has only about a 10% capital gain remaining before hitting my price target.) Strong Buy.
Crista Huff, Cabot Undervalued Stocks Advisor, www.cabotwealth.com, 978-745-5532, October 13, 2017