We rate BANK OF AMERICA CORP (BAC) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally poor debt management and disappointing return on equity.
Net operating cash flow has increased to $15,475.00 million or 43.10% when compared to the same quarter last year. In addition, BANK OF AMERICA CORP has also vastly surpassed the industry average cash flow growth rate of -32.89%.
The gross profit margin for BANK OF AMERICA CORP is rather high; currently it is at 59.50%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 8.80% trails the industry average. BAC, with its decline in revenue, underperformed when compared the industry average of 0.4%. Since the same quarter one year prior, revenues fell by 13.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
The debt-to-equity ratio is very high at 3.73 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.
The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Diversified Financial Services industry and the overall market on the basis of return on equity, BANK OF AMERICA CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.