Bank Of America: Buying Back Stock in Bulk

Bank of America (BAC) is one of the biggest financial institutions worldwide, serving millions of individual consumers, businesses, and governments. The company offers a wide range of financial services, including Read More... The post Bank Of America: Buying Back Stock in Bulk appeared first on TipRanks Financial Blog.

Bank Of America: Buying Back Stock in Bulk

Bank of America () is one of the biggest financial institutions worldwide, serving millions of individual consumers, businesses, and governments.

The company offers a wide range of financial services, including banking, investing, asset management, and risk management services.

Bank of America is currently the second-largest U.S. diversified bank in terms of market cap. Valued at $349 billion, it comes after only JPMorgan Chase & Co. (). Banks are benefiting greatly from the ongoing excess supply of cash.

The monetary policy, and stimulus check frenzy, act as a great growth catalyst that keeps boosting its financials. Bank of America's latest results clearly reflect this. I am bullish on the stock. (See BAC stock charts on TipRanks)

Cheap Interest Rates, Strong Profitability

The dead-cheap (and continuously declining) interest rate climate has caused investors in the banking industry to worry for years now.

Generally, a decline in interest rates leads to compressed lending margins for banks. Low rates tend to flatten the yield curve, which usually unfavorably impacts net interest incomes, echoing the fact that banks aim to borrow short-term, and lend long-term.

Bank of America and its peers have felt the agony of lower rates, and the company's most recent quarter again reflected this. In Q2 2021, Bank of America's net interest income declined 6% to 10.2 billion.

Still, the company managed to deliver a net income of $9.2 billion, the highest quarterly bottom line in its history. This was driven by robust growth in consumer deposits, which grew 21% to $979 billion, lower credit costs, a $3.7-billion improvement in provision for credit losses, and record consumer inflows in investment products.

Massive Buybacks to Boost EPS

Since suspending buybacks during the Great Financial Crisis, Bank of America has been gradually boosting repurchases, rewarding its shareholders richly.

In 2019, the company's repurchases hit a record of around $28 billion. While management paused buybacks in the early stages of the pandemic to be prudent, it has started reaccelerating them. In Q2, buybacks amounted to $4.21 billion.

Considering the bank's record profitability, buybacks could reasonably return to the $7-billion range per quarter. Assuming a reasonable return to $28 billion per year, the company would be buying back around 8.3% of its shares outstanding each year at its current market cap.

Hence, not only should EPS considerably benefit from buybacks, but along with the stock's dividend yield, which currently hovers at around 1.9%, shareholders should enjoy a capital return yield north of 10%.

Valuation

Bank of America is currently trading at 14 times its next 12-month net income, which should be a rather reasonable multiple.

Besides the excess supply of cash during these times, which should continue benefiting the company through more deposits and investor inflows, its aggressive buybacks should act as a strong EPS catalyst, as mentioned above.

Strong dividend increases ahead should also incentivize investors to keep buying the stock at its current levels, which should prevent a valuation compression. The company's latest DPS hike was by an impressive 17%, after it successfully passed its stress tests.

Wall Street’s Take

Turning to Wall Street, Bank of America has a Moderate Buy consensus rating on the stock, based on six Buys, four Holds, and one Sell assigned in the past three months. At $42.32, the average BAC price target implies 7% upside potential.

Disclosure: At the time of publication, Nikolaos Sismanis did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

The post Bank Of America: Buying Back Stock in Bulk appeared first on TipRanks Financial Blog.

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William Blair Believes ChannelAdvisor (ECOM) Still Has Room to Grow

In a report released today, Matthew Pfau from William Blair maintained a Buy rating on ChannelAdvisor (ECOM – Research Report). The company's shares closed last Friday at $28.26, close to its 52-week high of $28.94. According to TipRanks.com, Pfau is a 4-star analyst with an average return of 17.6% and a 71.4% success rate. Pfau covers the Technology sector, focusing on stocks such as The Descartes Systems Group, BigCommerce Holdings, and Manhattan Associates. Currently, the analyst consensus on ChannelAdvisor is a Moderate Buy with an average price target of $30.50. See today’s analyst top recommended stocks >> ChannelAdvisor's market cap is currently $804.6M and has a P/E ratio of 41.70. The company has a Price to Book ratio of 7.18. Based on the recent corporate insider activity of 42 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of ECOM in relation to earlier this year. TipRanks has tracked 36,000 company insiders and found that a few of them are better than others when it comes to timing their transactions. See which 3 stocks are most likely to make moves following their insider activities. ChannelAdvisor Corp. provides software as a service solution that enables the retailer and branded manufacturer customers to integrate, manage and optimize their merchandise sales across hundreds of online channels. Its customers utilize platform to connect with new and existing sources of demand for their products through channels such as Amazon, eBay, Facebook, Google and Walmart. The firm also offers solutions that allow brands to send their web visitors or digital marketing audiences directly to authorize resellers and to gain insight into consumer behaviour. The company was founded by M. Scot Wingo and Aris Antanas Buinevicius in June 2001 and is headquartered in Morrisville, NC. Read More on ECOM: Bank Of America: Buying Back Stock in Bulk Starbucks: Consistent Growth despite Challenges Has SPRT’s Short-Squeeze Play Run Out of Steam? Riot Blockchain Stock Appears Poised for a Rally Tilray Gains on Aphria Merger, Global Cannabis Operations The post William Blair Believes ChannelAdvisor (ECOM) Still Has Room to Grow appeared first on TipRanks Financial Blog.

In a report released today, Matthew Pfau from William Blair maintained a Buy rating on ChannelAdvisor (ECOM – Research Report). The company's shares closed last Friday at $28.26, close to its 52-week high of $28.94.

According to TipRanks.com, Pfau is a 4-star analyst with an average return of 17.6% and a 71.4% success rate. Pfau covers the Technology sector, focusing on stocks such as The Descartes Systems Group, BigCommerce Holdings, and Manhattan Associates.

Currently, the analyst consensus on ChannelAdvisor is a Moderate Buy with an average price target of $30.50.

ChannelAdvisor's market cap is currently $804.6M and has a P/E ratio of 41.70. The company has a Price to Book ratio of 7.18.

Based on the recent corporate insider activity of 42 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of ECOM in relation to earlier this year.

TipRanks has tracked 36,000 company insiders and found that a few of them are better than others when it comes to timing their transactions. See which 3 stocks are most likely to make moves following their insider activities.

ChannelAdvisor Corp. provides software as a service solution that enables the retailer and branded manufacturer customers to integrate, manage and optimize their merchandise sales across hundreds of online channels. Its customers utilize platform to connect with new and existing sources of demand for their products through channels such as Amazon, eBay, Facebook, Google and Walmart. The firm also offers solutions that allow brands to send their web visitors or digital marketing audiences directly to authorize resellers and to gain insight into consumer behaviour. The company was founded by M. Scot Wingo and Aris Antanas Buinevicius in June 2001 and is headquartered in Morrisville, NC.

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  • Has SPRT’s Short-Squeeze Play Run Out of Steam?
  • Riot Blockchain Stock Appears Poised for a Rally
  • Tilray Gains on Aphria Merger, Global Cannabis Operations

The post William Blair Believes ChannelAdvisor (ECOM) Still Has Room to Grow appeared first on TipRanks Financial Blog.

Source : Tip Ranks More   

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