Bank of America (BoA) ahead of Q3 reports!


By: Ahura Chalki

Q1 and Q2 Overview: (Yahoo Finance)

Market Cap: 273.478B

52 Weeks movement range: $22.66 – $31.17

Q1: EPS: Beat by $0.05                 Q2: EPS: Beat by $0.03

Q1: Revenue: 21.99B                    Q2: Revenue: 22.23B

Q1: Earning: 7.31B                       Q2: Earning: 7.35B

Q3 Estimated by “Seeking Alpha”

EPS – $0.68, up from $0.66 last Q3

Revenue: $22.73 billion, down 0.86%

Q3 Estimated by “Zacks”

EPS – $0.68, 12.12% YoY Decline

Revenue: $22.20 billion, 2.54% YoY Decline

So far, 2019 for major banks in the United States, was a profitable year with a similar growth trend (As you can see in the below chart), however, last month’s fears of global growth somehow helped the banks and somehow damaged them in Stock markets. Let’s check how.

Usually what happens in a mixed financial situation in the market is that investors will search for safe havens, and this is how the banks can use the opportunity to get more invest by selling them Gold or have their cash as USD since united states dollar is one of the most popular safes havens, either sell them the Bonds, as BoA also has “Bank of America Corp.-Bond (US338915AM36).” So they can grow the cash and now it is their turn to use the funds.

Since the last December market hit, BoA shares prices mostly raised and did not give the chance to new investors to log in to the market and buy the new shares. Ahead of Q3 report market is mixed and made some hopes on news investors to buy the shares at a lower price than current, however the question is Q3 report will hit it more or can be an opportunity to pick up more shares for a longer-term investment, but why so?

(I) Bank’s stocks are facing some pressure from rate cut policy, however, subsidiary companies generating substantial profits and using the cash generated to return massive capital to shareholders, so while rate cut is in beginning is negative for the Banks, investors are an optimist to that, in long term.

(II) BoA shares price comparing to its competitors in the stock market is so cheap and it makes more interest for buyers to invest there, as the current price for BoA shares is lower than $30, comparing 120 for JPM and $202 for Goldman Sachs.

Note: Having a lower share price than competitors, just by itself technically does not mean that it is an opportunity, however, psychologically it comes usually on the mind and can get the attention of smaller or even new investors, especially.

While we are waiting for Q3 earnings report of BoA, today before the US market opening that yesterday we had the report of two other major banks, the following data are collected from website:

JPMorgan (NYSE: JPM) gained 2.2% after reporting strong earnings and record revenue, due to strength in the bank’s bond trading and underwriting businesses, as well as its credit card business.

Goldman Sachs (NYSE: GS) slumped 3% after posting earnings per share of $4.79, below consensus forecasts.

Technical overview:

The technical chart shows the trend in a very positive direction, while from the latest decline, it is already cover all lost and trading now above 88.6% Fibo, while yesterday in the NY season tried above $30 and 100% of the Fibonacci level. Immediate support level sits at 28.58 as its 50% Fibo levels, as well as crossline of EMA50 and 200 periods, S2 sits at 27.80, while $30 is psychological level for 31.90 and then all-time high at 33.05 as next levels in uptrend move.

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