After Earnings: Is Bank of America Still a Buy?

The following video is part of our "Motley Fool Conversations" series, in which senior analyst Anand Chokkavelu, CFA, discusses topics around the investing world.

Bank of America recently reported earnings, and Anand checks in on how its latest quarter went and discusses whether Bank of America is still a buy in his book.

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Anand Chokkavelu, CFA, owns shares of Bank of America, JPMorgan Chase, Citigroup, and Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo and has created a covered strangle position on Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (11)

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  • Report this Comment On January 28, 2012, at 2:34 PM, tommer69 wrote:

    hello anand

    you fail to mention that the only reason their earnings were positive is that they they sold their interest in china construction bank for 1.8 billion, actual earnings were negative....Whatsmore if the US government made them show all the bad loans they have from countrywide on their balance sheet....lets just say it would be a very ugly picture....The US government i would agree doesnt want BAC to fail....but those are the reasons the stock is overpriced at 7 bucks...good luck with your investment however!~


  • Report this Comment On January 28, 2012, at 3:51 PM, rtheyden wrote:

    Anand has made prior recommendations on BAC and is invested which makes him gloss over some points.

    Mainly, the consensus eps estimate was $.23 and revised up within the month of the announcement.

    In particular, the -$.03 eps estimate by KBW was revised as they issued a release stating their previous estimate included a $1B litigation charge that may have been too heavy.

    Nonetheless, BAC reported $.15 per share or a 34.8% miss and only positive as a result of the construction bank sale as noted.

    Furthermore, poor earnings reflect the poor performance of the investment bank, capital markets and their mortgage operations not to mention the 1.5% drop in deposits as a result of their ATM fee increase that was later withdrawn. Additionally, the quarter does not include the month of December, so a lot of the capital market turmoil we saw over the last few weeks was not included in the report, but will be for next quarter.

    Finally, how is a 34.8% miss of earnings consensus in-line with anything? Obviously, many other analysts don't share your view since they are now targeting BAC at $4 a share.

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