Bank of America

Methodology

Bank of America's diversified banking operations across consumer, commercial, and investment banking create cyclical earnings tied to credit conditions and interest rates. The company's large retail deposit base provides funding advantages, but credit cycle timing significantly impacts profitability. Using normalized earnings across economic cycles rather than peak or trough figures provides more reliable fair value estimates for this mega-cap bank.

Methodology

Bank of America often shows attractive PEG ratios for a large diversified bank, though growth rates are cyclical and can be misleading. The company's sensitivity to interest rates and credit quality means growth accelerates in favorable environments and stalls during stress. For Bank of America, price-to-tangible-book value relative to return on tangible equity provides more insight than earnings-based PEG ratios that swing with cycles.

Methodology

Bank of America's meaningful dividend yield provides important total return, particularly during slow-growth banking environments. The company restored and grew its dividend post-financial crisis, though regulatory capital requirements constrain payout ratios. PEGY is more relevant than PEG for investors seeking total returns from a large bank, as dividends and buybacks provide returns when organic growth is limited by mature market positions.