The shares of Bank of America Corp (NYSE:BAC) was trading higher and its price reached its latest 52-week high at around $14 per share on Tuesday morning, prior to its scheduled financial earnings report for the second quarter of 2013.
Estimates for Bank of America Corp (BAC)’s earnings
Wall Street analysts projected that Bank of America Corp (NYSE:BAC) will post strong earnings results this quarter. Based on data compiled by Thomson Reuters, analysts expect the bank to post a net income of $2.9 billion or $0.25 earnings per share. Its revenue is estimated to be around $22.8 billion.
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The consensus estimate is higher than the $2.1 billion net income or $0.19 earnings per share on $21.96 billion revenue generated by Bank of America Corp (NYSE:BAC) in the same period a year ago.
Barclays analysts, Jason Goldberg has a higher earnings expectations for Bank of America Corp (NYSE:BAC). He projected that the bank will deliver a profit of $0.27 per share based on higher trading revenue.
Over the past 52-weeks, the stock price of Bank of America Corp (NYSE:BAC) increased by 78 percent. The stock value of the company went up from its lowest level at $6.09 to its highest level at $14.02 per share. The stock increased by 22 percent this year.
Bank of America (BAC) incurred losses
On the other hand, Sheetal Kothari, research analyst at Business and Financial Service projected that Bank of America Corp (NYSE:BAC) incurred losses in some of its holdings. The analyst said, “While the bank stands to gain from the slow recovery of the housing market, increases in interest rates may incur losses on bonds and other securities for the bank. Although the bank’s nonperforming loans ratio has been decreasing (2.6 percent in 2012), it is still quite high when compared to the industry average.”
Kothari added that the current situation of interest rates could depress the existing 16.3 percent capital ratio of the bank. Furthermore, the analyst said, “However, price-to-book value of Bank of America stands at 0.65, which is much below its competitors (Citigroup stands at 0.77). Analysts expect this multiple to reach close to 1, thereby indicating greater growth potential for this bank in the future quarters.”
Meanwhile, Sarhan Capital analysts Adam Sarhan believed that Bank of America Corp (NYSE:BAC) will outperform the $0.25 consensus estimate Wall Street analysts. According to him, the trends in the housing market gains demonstrate that the bank will deliver outstanding results similar to the performances of Citigroup (NYSE:C) and JPMorgan Chase (NYSE:JPM).
Sarhan said, “For the same reasons as JPMorgan, Bank of America has a high exposure to the U.S. economy and specifically the housing market. On average, all their lines of business benefited from a healthy environment and an improving housing market.”