Bank of America (NYSE:BAC) Stock Falls 4.7% on Disappointing Earnings

Bank of America Corporation (NYSE:BAC)’s stock price fell 4.7% on Wednesday after the company announced weaker than expected quarterly earnings. The stock traded as low as $49.26 and last traded at $51.4030. Approximately 115,487,841 shares were traded during trading, an increase of 207% from the average session volume of 37,581,672 shares. The stock had previously closed at $53.96.

The financial services provider reported $1.08 earnings per share (EPS) for the quarter, missing the consensus estimate of $1.10 by ($0.02). Bank of America had a net margin of 17.56% and a return on equity of 12.20%. The business had revenue of $29.96 billion for the quarter, compared to analyst estimates of $30.58 billion. During the same period in the prior year, the business earned $1.06 EPS. The company’s revenue for the quarter was up 3.2% compared to the same quarter last year.

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 issued a $0.32 dividend. This is an increase from Bank of America’s previous quarterly dividend of $0.28. This represents a $1.28 annualized dividend and a dividend yield of 2.5%. The ex-dividend date was Friday, September 4th. Bank of America’s dividend payout ratio is presently 29.36%.

Key Headlines Impacting Bank of America

Here are the key news stories impacting Bank of America this week:

• Positive Sentiment: Underlying banking trends were relatively solid: net interest income rose 8% year over year to $16.4 billion, average deposits increased 2% to $2.02 trillion, and average loans and leases grew 6% to $1.23 trillion. Bank of America Reports $6.9 Billion Third-Quarter Net Income
• Positive Sentiment: Consumer banking revenue rose 4% and global wealth and investment management revenue increased 13%; Merrill Lynch’s fee-based advisory assets reached a record $1.9 trillion. The bank also returned $8.3 billion to shareholders through dividends and repurchases. Merrill Lynch’s Fee-Based Advisory Assets Just Hit a Record $1.9 Trillion
• Positive Sentiment: An institutional investor purchased a large block of long-dated BAC call options, signaling that some investors see potential value after the selloff. Unusual LEAP Call Options in Bank of America
• Neutral Sentiment: Bank of America CEO Brian Moynihan said the company is committed to fixing regulatory deficiencies. The bank hired about 1,000 contractors to help 3,000 employees patch software weaknesses, with management expecting those costs to decline over time. Bank of America Hired 1,000 Contractors to Patch Software Flaws
• Neutral Sentiment: Hotter-than-expected September inflation pushed Treasury yields higher and pressured the broader market, adding to the negative trading environment for financial stocks. Hotter CPI Sends Futures Lower as Yields Jump
• Negative Sentiment: U.S. regulators imposed more than $1.2 billion in penalties, including the OCC’s largest-ever bank fine, after citing failures to report over $5 billion in suspicious transactions and additional sanctions violations. The charge was non-tax-deductible and significantly reduced quarterly earnings. Bank of America Hit With More Than $1.2 Billion in Penalties
• Negative Sentiment: Third-quarter net income fell to $6.9 billion, or $0.91 per diluted share, while adjusted EPS of $1.08 missed the $1.10 consensus estimate and revenue of roughly $30.0 billion trailed expectations. Investment banking and trading revenue also weakened, while credit-loss provisions rose to $1.3 billion. Bank of America Profit Hurt by $1.2 Billion Fine
• Negative Sentiment: Several law firms announced shareholder investigations, adding reputational and potential litigation risks, although such announcements do not necessarily indicate that claims will succeed. Securities Fraud Investigation Into Bank of America

Wall Street Analyst Weigh In

A number of analysts have recently issued reports on BAC shares. JPMorgan Chase & Co. cut their target price on shares of Bank of America from $68.00 to $62.00 and set an “overweight” rating for the company in a research note on Friday, October 2nd. HSBC assumed coverage on shares of Bank of America in a research note on Monday, September 28th. They issued a “buy” rating and a $65.00 price target on the stock. Morgan Stanley reissued an “overweight” rating on shares of Bank of America in a report on Tuesday, September 15th. Rothschild & Co Redburn set a $72.00 price objective on shares of Bank of America in a research report on Tuesday, October 6th. Finally, Truist Financial cut their price objective on shares of Bank of America from $65.00 to $62.00 and set a “buy” rating for the company in a research report on Thursday, October 1st. Nineteen equities research analysts have rated the stock with a Buy rating and seven have issued a Hold rating to the company’s stock. According to data from MarketBeat, the stock has an average rating of “Moderate Buy” and a consensus target price of $64.22.

Institutional Inflows and Outflows

Several large investors have recently added to or reduced their stakes in BAC. Turim 21 Investimentos Ltda. acquired a new stake in shares of Bank of America in the second quarter valued at approximately $25,000. Abound Financial LLC acquired a new stake in Bank of America during the fourth quarter worth approximately $26,000. Cherry Tree Wealth Management LLC grew its position in Bank of America by 167.6% during the second quarter. Cherry Tree Wealth Management LLC now owns 479 shares of the financial services provider’s stock worth $27,000 after buying an additional 300 shares in the last quarter. Principia Wealth Advisory LLC increased its stake in Bank of America by 69.9% during the 2nd quarter. Principia Wealth Advisory LLC now owns 530 shares of the financial services provider’s stock worth $30,000 after acquiring an additional 218 shares during the period. Finally, Frazier Financial Advisors LLC bought a new position in Bank of America during the 2nd quarter worth $34,000. Institutional investors own 70.71% of the company’s stock.

Bank of America Price Performance

The stock has a market capitalization of $359.45 billion, a price-to-earnings ratio of 11.79, a PEG ratio of 0.88 and a beta of 1.21. The company has a debt-to-equity ratio of 1.23, a quick ratio of 0.82 and a current ratio of 0.83. The company has a fifty day simple moving average of $59.75 and a two-hundred day simple moving average of $56.67.

About Bank of America

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.