It’s an important week for bank-stock investors as financial behemoth Bank of America (NYSE:BAC) plans to report its fiscal first-quarter 2021 results on the morning of April 15. With that, we should expect to see higher trading volumes on BAC stock.
The projections are mixed. Reportedly, Wall Street is preparing for Bank of America to post 63 cents per share in quarterly earnings, representing a year-over-year increase of 57.5%.
Meanwhile, the analysts are expecting quarterly revenues of $21.74 billion, signifying a decrease of 4.5% compared to the year-ago quarter. And beyond the “good news, bad news” forecasts, some value-oriented investors might claim that BAC stock’s starting to get expensive.
I fully understand the contrarian perspective. Nonetheless, I’m willing to align with the momentum-trading crowd in this case, as Bank of America continues to make strategic investments into its future.
A Closer Look at BAC Stock
Can a stock be expensive and cheap at the same time? Brace for cognitive dissonance as we now delve into the finer details of BAC stock.
As of the time of writing, the stock had a 52-week range of $20.10 to $40.38. And the shares are trading at $40.03, which is very close to the 52-week high.
That would tend to suggest that BAC stock isn’t a bargain at all. And as a contrarian investor myself, I realize that some folks might bristle at the idea of buying a stock after a massive bull run.
Yet, let’s step back and take a look at the stock from a different perspective. In particular, we’ll observe that the stock has a trailing-12-month price-to-earnings (P/E) ratio of 21.43.
That’s not an outrageous P/E ratio, by any means. Moreover, income-focused investors should be glad to know that BAC stock offers a forward annual dividend yield of 1.8%.
Therefore, there might be value in this stock, even after a strong share-price rally. Besides, as we’ll discover, Bank of America’s ambitious investments should offer encouragement to both current and prospective shareholders.
A Venture into Healthcare Fintech
Let’s be honest. Some folks tend to view Bank of America as an old, stodgy financial giant.
The bank is, however, making moves to change that perception. I’ll report on two of these initiatives today.
The first one involves Bank of America’s venture into the healthcare fintech space. Specifically, the bank is acquiring Santa Barbara, California-based AxiaMed.
The primary focus of AxiaMed is to facilitate patient payments through a cloud-based healthcare payment platform. This isn’t just some retrofitted software program, as AxiaMed’s platform is uniquely designed for the healthcare industry.
Mark Monaco, head of enterprise payments at Bank of America, anticipates that the two companies can “leverage [their] joint expertise and capabilities to deliver a comprehensive range of payment and settlement solutions to our healthcare clients and their patients.”
Investing in Sustainability
As I see it, expanding Bank of America’s payment offerings for healthcare clients is a savvy move that will pay off in the long run.
And speaking of paying off in the long run, BAC stock investors should applaud the bank’s recently announced massive financial commitment to a more sustainable future.
Evidently, Bank of America will mobilize and deploy $1 trillion in its Environmental Business Initiative by 2030 “in order to accelerate the transition to a low-carbon, sustainable economy.”
This will reportedly be part of Bank of America’s broader $1.5 trillion sustainable-finance goal.
Plenty of businesses talk about environmental, social and governance (ESG) investing, but it looks like Bank of America is ready to put its money where its mouth is.
Bank of America Vice Chairman Anne Finucane offered further insight into the company’s larger vision for this initiative.
“The private sector is well-positioned to ensure that the capital needed — at the scale it is needed — can drive the transition to a low-carbon, sustainable economy,” Finucane explained.
The Bottom Line
I’m not going to pretend that Bank of America’s primary goal is to make the world a better place. Frankly, the prime directive is to make money.
But hey, that’s what banks do, and at least Bank of America is focusing on the future instead of getting mired down in short-term concerns.
So, is BAC stock cheap or expensive? I’ll leave the final decision up to you. In view of the company’s recent initiatives, though, you should find some reasons to view the stock as a good value.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content — and crossed the occasional line — on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.