Is Bank of America Corp (BAC) overvalued?
On Equity Rank's model estimate, BAC trades close to its fair value (10% above it). Bank of America Corp (BAC) last closed at $49.42; the multi-method model fair value is $45.04.
| Price | Model fair value | Price vs model |
|---|---|---|
| $49.42 | $45.04 | 10% above |
What the answer rests on
- 2 of 12 valuation methods put BAC's value above its price and 10 put it below, so the methods mostly agree.
- To justify today's price, BAC's free cash flow would need to grow about 12.2% a year for ten years (a reverse discounted cash flow).
- BAC trades at 12.3 times its last year's earnings, against a median of 12.2 for 253 profitable Banks companies.
- Over the past year the price sat below the model fair value on 0% of trading days. The gap ranged from 7% above to 50% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind BAC's fair value · What prices assume · Other companies