Bank of America (BAC) stock shot higher out of the gate Tuesday after the banking giant beat top- and bottom-line expectations for its second quarter.
In the three months ended June 30, Bank of America's revenue increased 0.8% year-over-year to $25.4 billion, with upside limited by a 3.2% decline in net interest income (NII) to $13.9 billion. The company also said earnings per share (EPS) fell 5.7% from the year-ago period to 83 cents.
"Our team produced another strong quarter, serving a growing client base," Bank of America CEO Brian Moynihan said in a statement, adding that the company's "Global Markets business delivered its ninth consecutive quarter of year-over-year revenue growth in sales and trading, earning double-digit returns."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The headline results cruised past analysts' expectations. Wall Street was anticipating revenue of $25.2 billion and earnings of 80 cents per share, according to CNBC. Meanwhile, its net interest income result matched estimates.
"I thought that BAC had one of the stronger reports relative to peers and expectations," says David Wagner, portfolio manager at Aptus Capital Advisors. "Bank of America is one of the highest quality banks out there and when it is a difficult environment for NII, the bank can pull multiple levers to execute and BAC did just that, as their results were driven by better-than-expected non-interest income and lower-than-expected non-interest expense."
Bank of America also said it repurchased $3.5 billion of common stock during the quarter and reiterated that it will hike its quarterly dividend by 8%, which it first announced in late June following the release of the Federal Reserve's stress test results. Stock buybacks and dividends can boost value for shareholders.
Is Bank of America stock a buy, sell or hold?
Wall Street is bullish on Bank of America stock, which happens to be one of the biggest holdings in Warren Buffett's Berkshire Hathaway equity portfolio. According to S&P Global Market Intelligence, the consensus recommendation among the analysts it tracks is a Buy.
However, analysts' price targets have struggled to keep up with BAC's run higher. Indeed, the financial stock is up nearly 30% on a total return basis (price change plus dividends) in 2024 and more than 51% in the last year. Currently, the average price target of $42.24 represents a slight discount to current levels.
Given BAC's performance on the price charts and its latest quarterly beat, analysts may very well revise their estimates higher in the days and weeks ahead.
Related Content
-
Stock Market Today: Stocks Are Mixed Before Liberation DayMarkets look forward to what comes with the reordering of 80-year-old global trade relationships.
-
Stagflation: What It Is and Why Retirees Should CareStagflation — the economic bogeyman of the 1970's — may return to the US. Here's what it could mean to your retirement.
-
Stock Market Today: It's the Old Up-Down Again on Liberation DayMarkets look forward to what comes with the reordering of 80-year-old global trade relationships.
-
Can a New Manager Cure Vanguard Health Care Fund?Vanguard Health Care Fund has assets of $40.5 billion but has been ailing in recent years. With a new manager in charge, what's the prognosis?
-
What You Don't Know About Annuities Can Hurt YouLack of awareness leads many to overlook these potent financial tools, and with the possibility of running out of money in retirement, that could really hurt.
-
Three Keys to Logical Investing When Markets Are VolatileFocusing on these market fundamentals can help investors stay grounded rather than being swayed by emotion or market hysteria.
-
Yes, the Markets Are Spooked, But You Don't Have to BeIt's human nature for investors to freak out in a downturn. But with a little discipline, you can overcome the urge to sell and stay focused on long-term goals.
-
Remembering Bogle: A New Standard for Municipal InvestingImprovements in technology, data, systematic trading and risk analytics have led to more successful municipal indexing.
-
Stock Market Today: Stocks Are Mixed Before Liberation DayMarkets are getting into the freewheeling rhythm of a second Trump administration.
-
How to Invest in SportsIf it's springtime, Forbes is out with its annual list of baseball franchise values. The billions involved might make you wonder how to invest in sports.
