Strong Earnings Growth Should Bring Bank Of America Back Into Favor

This year has not been a good one for the stocks of money center banks, as investor nervousness over higher capital requirements, weaker capital markets revenue, and a slowing macro environment have pushed valuations back to levels well below historical averages. Bank of America (NYSE:BAC) has been no exception, as the shares have lost about 20% of their value since my last update, underperforming other large banks over that time.

Money center banks clearly aren’t in favor right now, but I believe strong earnings growth should drive improved sentiment later this year, particularly as the banks build capital and get closer to a point where significant returns of capital to shareholders can resume. With Bank of America still offering above-average rate leverage, loan growth potential, and earnings growth leverage, I think the shares still have appeal at this lower level.

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Strong Earnings Growth Should Bring Bank Of America Back Into Favor