Bank Of America Still Undervalued As It Invests Through The Downturn

Bank of America's (BAC) recent share price performance (over the last three to six months) has certainly left something to be desired compared to its peer group, but that's not entirely unexpected given the bank's well-above-average rate sensitivity and management's decision to continue investing in the long-term growth of the business. I believe that the latter point will prove important over time, as BAC continues to build up its digital banking capabilities and fee-generating businesses with an aim toward consolidating even more U.S. banking business.

My sentiment on Bank of America isn't much different than it was a quarter ago - I think the shares are meaningfully undervalued and offer attractive long-term potential, but the bank is not particularly well-positioned for the current environment and relative operating performance is going to be lackluster for a while. Investors who aren't so concerned about near-term performance (or aren't interested in market timing) should take a closer look, but this is a name that will need some time (and interest rate normalization) to outperform.

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Bank Of America Still Undervalued As It Invests Through The Downturn