Why Bank of America May Fall Into a Bear MarketNovember 22, 2018
Bank of America Corp.’s ( BAC ) stock has already dropped 17% from its highs.
Despite the steep drop the stock is trading at a very high valuation based on its price to tangible book value .
This high valuation comes despite significantly slowing earnings and revenue growth in 2019.
That suggests the stock may fall back to technical support around $26, declining from its current price around $27.40.
The valuation would need to drop to around 1.2 to come back to the historical norm.
Revenue estimates for next year have also dropped to around 4% from 5%.
The slowing growth and declining earnings estimates for 2019 may be one reason why the stock is currently trading with a 2019 PE Ratio of 9.5.
It may suggest investors believe earnings estimates will continue to fall.
Meanwhile, slowing loan growth has also plagued this group in recent months.
Click here for Kramer’s bio and his portfolio’s holdings .
Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company’s actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer’s bio and his portfolio’s holdings. Information presented is for educational purposes only and does not intend to make an offer or solici…