On May 21, 2014, we issued an updated research report on
Bank of America Corporation
). The detection of an accounting error, which resulted in a
downward revision of capital ratios as well as suspension of BofA's
enhanced capital deployment plans, makes us apprehensive. Further,
the company recorded loss in the first quarter compared to the
Zacks Consensus Estimate of earnings.
BofA's first-quarter loss of 5 cents per share substantially lagged
the Zacks Consensus Estimate of earnings of 5 cents. Litigation
expense and related legal reserves previously announced by the
company were the main reasons behind such a disappointing outcome.
Moreover, lack of top-line improvement, higher provision and an
unfavorable expense trend pressurized the bottom line.
Also, deposits re-pricing pressure, lower loan levels and strain
from derivative positions have been weighing upon the net interest
yield. Further, given the persistent low rate environment, no
significant improvement in interest yield is expected over the next
Dismal first-quarter results and the subsequent events failed to
gain investors and analysts' confidence on the stock. Hence, over
the last 30 days, the analysts are bearish on BofA, leading to a
decline in the Zacks Consensus Estimate. For 2014, the Zacks
Consensus Estimate fell 5.1% to 93 cents per share, while for 2015
it decreased 1.9% to $1.54 per share.
BofA presently has a Zacks Rank #5 (Strong Sell).
Stocks That Warrant a Look
Some better-ranked major banking stocks include
The Bank of New York Mellon Corporation
State Street Corp.
). All these stocks carry a Zacks Rank #3 (Hold).
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BANK OF AMER CP (BAC): Free Stock Analysis
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