To The Moon

My 2nd post to Tiger_chat 's question of whether an investor profits from a good company or a good price ?

To that I have asked, "why not both" ?

Wouldn't that have more upside comparatively speaking ?

Let's take a look at $Bank of America(BAC)$ , its Q4 2022 earnings and see if it fits the bill. 

Sidetrack : I have covered two banks (Jefferies & Wells Fargo) to test out my theory.

• $Wells Fargo(WFC)$ - Click here to access if interested. Pls "Like" it ok. Thanks.
• $Jefferies (JEF) - Click here to access if interested.  Pls "Like" it ok. Thanks. 

• An American multinational investment bank & financial services holding company
• With roots tracing back to 1904, Bank of Italy
• It officially changed its name to Bank of America (BAC) on 01 Nov 1930
• Its the 2nd largest bank in the world by Market Capitalization.
• One of the Big 4 banking institutions of US with offices in 35 countries
• Its core financial services are in (a) Commercial banking, (b) Wealth management and (c) Investment banking
• It grew into its size thru years of strategic mergers and acquisitions (M&A)

In 2022, a year where US market has been hammered by extremely volatility - how did BAC perform ?

Current stock price < BAC stock price dtd 18 Jan 2022 by -23.84%;

• Total revenue came in at $24.5 Billion vs $24.33 Billion expected earnings.
• Net income was $7.1 Billion vs $7.0 billion (YoY).
• Earnings per share was $0.85 vs $0.77 expected: according to Refinitiv
• Higher interest rates helped the Wall Street giant make up for a sharp slowdown in investment banking

BAC - Segment Revenue

• Above is a more detailed breakdown of $BAC's revenue source from the different departments
• Investment banking (IB) business did not perform well. IB's fees of $1.1 Billion tanked -54.4% (YoY) this quarter
• This explained why "Global wealth & Investment management" registered "flat" growth.

BAC - Other details

• Quarterly Net Interest Income (NII) rose +28.6% to $14.7 Billion (YoY), driven by (a) higher interest rates, (b) lower premium amortization expenses and (c) loan growth
• Non-interest income decreased -7.5% to $9.9 Billion vs expectations of $8.92. Fall was attributed to lower fees & commissions.
• Provision for credit losses was -$1.10 Billion vs benefit of $489 million in Q4 2021.

Bank Of America's CEO on Q4 2022 Results :

We ended the year on a strong note growing earnings YoY i nthe 4th Quarter in an increasingly slowing economic environment. The themes in the quarter have been consistent all year as organic growth and rates helped deliver the value of our deposit franchise..... Brian Maynihan, CEO, Bank of America.

Why Bank Of America is Both A Good Price and Good Company ?

• Banking stocks are non-cyclical in nature unlike semiconductors (for example).
• With interest rates forecasted to continue rising to the 5% terminal rate banding means more revenue "potentially" to be earned by US financial institutions
• With a generous annual dividend of $0.88 per share (2.71% to current stock price), what is there not to like.  $Meta Platforms, Inc.(META)$ - No dividends. $Tesla Motors(TSLA)$ -No dividends.
• Comparing its current stock price and 18 Jan 2022 stock price, there is a potential upside of 23.84% 

• Do you agree that stock that is both Good Price and Good company, is better than a stock that is attractive in either condition only ?
• Do you agree that Bank of America, is both a Good company and a Good Price (casting aside the legal settlement) ?

Please "Like" this post ok. Thanks. The rating is very important to me !!

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