Bank of America (NYSE:BAC), a Zacks Rank #3 (Hold) company, is projected to report a weak trading business performance for Q3 2023 on Tuesday, October 17. The forecasted downturn is attributed to subdued market volatility and client activity in the September-ended quarter, influenced by an economic slowdown, hawkish Federal Reserve policy, and geopolitical issues that bred investor uncertainty.
This environment resulted in lower volatility across multiple asset classes and weak markets revenues. BAC's estimated total sales and trading revenues for Q3 stand at $3.94 billion, indicating a 3.8% year-on-year decline. The earnings estimate of 80 cents per share shows a 1.2% drop from the previous year, with an alternative estimate suggesting earnings of 78 cents.
Sales are projected at $25.1 billion, representing a 2.6% growth year-on-year, although an alternate estimate places sales at $24.6 billion. In addition to the weak trading performance, BAC's subdued investment banking results, higher provisions, and increasing expenses are also expected to have negatively influenced the third-quarter numbers.
InvestingPro data reveals that BAC's market cap stands at 212.96B USD, with a P/E ratio of 7.71, suggesting it's trading at a low P/E ratio relative to near-term earnings growth. The company has also seen a revenue growth of 5.63% LTM2023.Q2, and an operating income margin of 34.55% LTM2023.Q2, demonstrating its profitability over the last twelve months.
Despite these challenges, the impact of higher interest rates may have provided some relief. According to InvestingPro Tips, Bank of America has raised its dividend for 9 consecutive years and has maintained dividend payments for 53 consecutive years, showing its ability to reward shareholders even in challenging times. The company's dividend yield stands at 3.57% Y2023.D286, with a dividend growth of 14.29% LTM2023.Q2.
Other major financial institutions such as Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS), where trading revenues account for a significant part of total revenues, are also anticipated to report weak trading performances for Q3 2023.
Goldman Sachs is set to release its results on the same day as Bank of America, while Morgan Stanley will do so on Wednesday, October 18. Investors can find more insights and tips on InvestingPro, which offers 8 additional tips specifically for Bank of America and countless more for other companies.
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