Bank Of America: The Numbers (Still) Tell A Good Story

Oct. 25, 2019 1:22 PM ETBank of America Corporation (BAC)62 Comments
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  • Bank of America recently reported strong Q3 2019 results that beat the top- and bottom-line estimates.
  • Bank of America is operating in a challenging environment, but I believe that investors should keep banking on this large financial institution.
  • Bank of America is my largest position, and I plan to stay long the stock.
  • This idea was discussed in more depth with members of my private investing community, Going Long With W.G.. Get started today »

Bank Of America's (NYSE:BAC) stock has performed well so far in 2019, as BAC shares have significantly outperformed the broader market over the last 10+ months.


Source: YCharts

I have been long BofA for awhile now, but, in my opinion, BAC shares currently look more attractive than they have in years. While the large U.S. banks are definitely contending with a tough/challenging operating environment, I believe that BofA is still worthy of investment dollars, even above $30 per share.

It also helps that BofA's most recent quarterly results show that the bank's long-term story remains intact.

The Latest, The Q3 2019 Results Tell A Good Story

On October 16, 2019, BofA reported Q3 2019 financial results that beat the top- and bottom-line estimates. The bank reported Q3 2019 adjusted EPS of $0.75 (beat by $0.07) on revenue of $22.8B (beat by $70M), which also compares favorably to the year-ago quarter.

Source: Q3 2019 Earnings Slides

Highlights from the quarter:

  • Strong return metrics: return on assets and return on equity of 1.23% and 11.2%, respectively (both are ex the material non-cash impairment - more on this below)
  • Strong results for its Consumer Banking (net income up 5%, loans up 7%, and deposits up 3%), Global Wealth Investment Management (net income up 8%, loans up 5%, and deposits up 7%), and Global Banking (net income up 3%, loans up 7%, and deposits up 7%) divisions
  • Bought back $7.6B worth of common shares during the quarter and its book value increased by 11% YoY (to $26.96)

The analysis excludes the previously announced JV non-cash impairment, which, in my mind, should be viewed as a one-time hit. Anyhow, BofA reported solid operating results and was able to hold expenses (and its efficiency ratio) steady when compared to the last few quarters.

Additionally, there have

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This article was written by

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Our President and CIO is a CPA with experience in public accounting and the financial services industry. He earned his Master of Accountancy degree in 2008 and his B.S. in Business Management in 2007. He is also a Level III CFA candidate. He has been intrigued by the market from the start. Over the years, he has learned that long-term investing is a discipline that, if followed, will help contribute to building lasting wealth. As such, most of our articles will be about the investments that we plan to hold for at least 3 to 5 years, as long as the company's story does not change. As a Seeking Alpha contributor, our main goal is to write about the companies that are key to our portfolio with the hope of promoting discussion (for or against the investment) from others within the SA community.Please visit our website for more information about W.G. Investment Research LLC.

Disclosure: I am/we are long BAC, C. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Disclaimer: This article is not a recommendation to buy or sell any stock mentioned. These are only my personal opinions. Every investor must do his/her own due diligence before making any investment decision.

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