Is Bank of America Corp (BAC) a Buy After Earnings?

We can also compare Bank of America to Wells Fargo & Co (NYSE:WFC) and to Morgan Stanley (NYSE:MS). Wells Fargo is seen as a more stable megabank, with the result being that its market capitalization is actually significantly higher than book value with a P/B ratio of 1.3. However, because Wells Fargo has been so good at generating income from these assets its current price represents a trailing P/E of only 10, and it might be worth its premium to some other banks. Morgan Stanley (NYSE:MS), a pure play investment bank, matches Bank of America’s forward P/E of 8. However, that company has been experiencing losses in some of its recent quarters and until it becomes more stable in terms of profitability we would avoid it.

Bank of America doesn’t seem like as good a buy as JPMorgan Chase, and possibly Wells Fargo & Co (NYSE:WFC) and Citigroup as well. While the book value of its equity is considerably higher than where the market is currently pricing the company, in terms of earnings it has been struggling while some of its peers have delivered stronger financial performance. Those banks might be better places to start looking for value in the financial sector at this time.

Disclosure: I own no shares of any stocks mentioned in this article.