BofA (BAC) Beats on Q4 Earnings Excluding the Tax Impact

Have you been eager to see how Bank of America Corporation BAC performed in Q4 in comparison with the market expectations? Let’s quickly scan through the key facts from this Charlotte-based one of the world's largest financial institutions’ earnings release this morning:

An Earnings Beat

BofA came out with adjusted earnings of 47 cents per share, which surpassed the Zacks Consensus Estimate of 44 cents.  Results exclude a one-time charge of 27 cents related to the Tax Act.

Increase in revenues was the key reason for the earnings beat.

How Was the Estimate Revision Trend?

You should note that the earnings estimate revisions for BofA depicted a bearish stance prior to the earnings release. The Zacks Consensus Estimate has declined 4.3% over the last 30 days.

Nonetheless, BofA has an impressive earnings surprise history. Before posting the earnings beat in Q4, the company delivered positive surprises in all four trailing quarters.

Bank of America Corporation Price and EPS Surprise

 

Bank of America Corporation Price and EPS Surprise | Bank of America Corporation Quote

Overall, the company has a positive earnings surprise of 8.4% in the trailing four quarters.

Higher-than-expected Revenues

BofA posted adjusted net revenues of $21.4 billion, which was marginally above the Zacks Consensus Estimate of $21.3 billion. This excluded $0.9 billion of one-time charge related to the tax act.

Key Q4 Statistics
 

• Including the one-time charge of $2.9 billion related to tax act, net income was $2.4 billion

• Investment banking fees were $1.4 billion, up 16%

• Sales and trading revenue (excluding net DVA) down 9%

• Provision for credit losses jumped 29% to $1 billion

• Non-interest expense down 1% to $13.3 billion

What Zacks Rank Says

The estimate revisions that we discussed earlier have driven a Zacks Rank #1 (Strong Buy) for BofA. However, since the latest earnings performance is yet to be reflected in the estimate revisions, the rank is subject to change. While things apparently look favorable, it all depends on what sense the just-released report makes to the analysts.

(You can see the complete list of today’s Zacks #1 Rank stocks here.)

How the Market Reacted So Far

Following the earnings release, BofA shares were up nearly 1% in the pre-trading session. This is in line with what the stock witnessed in the prior-day’s session. Clearly, the initial reaction shows that the investors have considered the results in their favor. However, the full-session’s price movement may indicate a different picture.

Check back later for our full write up on this BofA earnings report!

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