The Zacks Banks – Major Regional Industry has struggled year-to-date, declining more than 23% in value and underperforming the general market. Throughout 2022, these double-digit declines have hit many industries.
A company residing in the industry, Bank of America
BAC
, is slated to release quarterly results before the opening bell on Monday, July 18
th
. Bank of America is currently a Zacks Rank #3 (Hold) with an overall VGM Score of an F.
In Q1 2022, the market primarily reacted poorly to quarterly results, and red was widespread. Now that the second round of reports is at our doorstep, investors are more than eager to see how companies have navigated the rough economic waters we’ve found ourselves in.
Let’s look at BAC a little closer to see how the company shapes up heading into the quarterly report.
Share Performance & Valuation
Bank of America shares have tumbled year-to-date, losing more than 30% in value and underperforming the S&P 500 by a notable margin.
Image Source: Zacks Investment Research
Over the last year, the story primarily remains the same; BAC shares have struggled to hold a healthy uptrend, declining more than 20% in value and underperforming the S&P 500 in this timeframe as well.
Image Source: Zacks Investment Research
BAC sports an enticingly low 9.3X forward earnings multiple, well below its five-year median value of 12.4X. In addition, the value represents a steep 33% discount relative to its Zacks Sector.
Image Source: Zacks Investment Research
Quarterly Performance & Share Reactions
BAC has primarily reported bottom-line results above expectations, exceeding bottom-line estimates in six consecutive quarters and eight of its last ten. Furthermore, the company recorded a 5.3% bottom-line beat in its latest quarter.
Quarterly sales have typically come in above estimates as well; BAC has exceeded quarterly revenue estimates in seven of its last ten quarters.
Recently, the market has not reacted well to the company’s bottom-line beats – out of its last six EPS beats, shares have moved upwards just twice following the reports.
Growth Estimates
For the quarter to be reported, the Zacks Consensus EPS Estimate resides at $0.77, penciling in a double-digit 25% decrease in quarterly earnings year-over-year. In addition, six analysts have lowered their quarterly outlook over the last 60 days, with the Consensus Estimate Trend slipping by 5%.
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However, quarterly revenue estimates display top-line strength; the $23 billion quarterly revenue estimate notches a solid 7% growth in sales from the year-ago quarter.
Image Source: Zacks Investment Research
Bottom Line
Quarterly earnings are forecasted to take a significant hit, but quarterly revenue is estimated to increase.
In addition, two other big banks – JPMorgan
JPM
and Morgan Stanley
MS
– recently reported their quarterly results, and both missed on the bottom-line.
Pairing the recent results from other peers and the poor market reactions to BAC’s quarterly reports, it appears beneficial for investors to go into the quarterly report with a defense-first approach.
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