BAC: Bank of America
Nationwide Bank
Recent Range: $6/share – $53/share (Current Price: 15.89, as of close of 6/3/10)
Price/Sales (P/S) = 1.34 (1.60, Industry)
Price/Book (P/B) = 0.73 (0.81)
Gross Margin = Not Available
Pre-Tax Margin = 2.9% (1.7%)
Debt/Equity Ratio = 3.98 (3.53)
Current Ratio = Not Available
Return on Equity = -1.3% (-0.8%)
Return on Assets = 0.2% (0.2%)
Analysis: This company is unexciting, but this industry makes me still have to guess that this is a good long-term buy.
Technically, it’s a little cheaper compared to the average within its industry, but you’d expect that even though they’re a little more profitable than average, they are also provide a smaller return on investment. So the relative price seems to in alignment.
It pays a dividend, but it was a recipient of the federal TARP loans. So they are not allowed to pay more than $0.01/share, which makes for a ridiculously low dividend yield of almost 0.25 percent. For a bank stock, this is not really a selling point.
Another thing to dislike is how many people constantly report about its poor customer service. None of the banks are not being too accessible right now with all of the foreclosure, loan modifications, and loan term refinancing happening. The longer the banks take to formally address these asset write downs, the better their books will look. However, Bank of America seems to be getting the most negative customer service reviews.
For the short term, another concern is the pending commercial foreclosures. I suspect that this will be more of an irritation than a knee-buckling calamity, but a lot of people are really fearing this. This fear might drive down the price during the short to intermediate term (within the next 18 months).
Ultimately, this is probably a buy, but the company hasn’t really earned it. It’s riding on the coattails of its industry.
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