Bank Of America Case Analysis

1911 Words8 Pages
1 Analysis The Focus points are on the Bank of America studies. The studies on Bank of America have multiple areas that can be useful for comparison. The first financial ratio’s we look at is the P/E ratio and the earnings per share. Next we look at two profitability ratios: Asset turnover Ratio and return on Equity. Financial ratios/Indicators Price-Earnings Ratio (P/E Ratio) The price earnings ratio refers to the share price of the bank divided by the amount of profit it makes per share on a yearly basis. For investments, it is preferred to have a company with a lower P/E ratio. This ratio can be used mostly for companies within the same industry. A lower P/E ratio tends to be more favorable. Earnings per Share (EPS) Earnings per share…show more content…
This can show how efficient a company is by comparing their revenue with the amount of assets they have. This is usually calculated on an annual basis. Naturally, a higher asset turnover ratio is preferred. Return on Equity (ROE) Return on Equity is the net income divided by the shareholder’s Equity. It shows a company’s profitability by showing how much money a company generates compared to what has been invested into it. This number is often shown as a percentage. This is a good tool to compare companies within the same industry. Comparison: Bank of America compared to Citigroup, JPMorgan and others The ratios that were discussed in the first section. of the paper will be used to compare Bank of America with Citigroup, JPMorgan and Wells Fargo or…show more content…
Bank of America has a strong earnings strength and relative valuation. The price movement is said to be on the negative side. Yet future projections are great based on these three factors, and Bank of America is expected to outperform the market for the coming year. The improvements took a long time and they can finally deliver better numbers throughout the year. When looking at the Zacks report we see the very same optimism. We see that Bank of America is doing relatively good, where their earnings outpaced the industry. The bank outpaced their estimates placed by Zacks. Here as well as in the other studies they mention the fact that BoA is streamlining and simplifying their operations which in turn increases efficiency. They give a C for value, a B for growth and A for momentum. S&P Capital IQ has positive views as well when it comes to the bank. Differences in these

More about Bank Of America Case Analysis

Open Document