Banks - Diversified · NYSE
Current Price
$49.56
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on Bank of America Corporation with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
Bank of America Corporation, through its subsidiaries, provides banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments worldwide. Its Consumer Banking segment offers traditional and money market savings accounts, certificates of deposit and IRAs, noninterest-and interest-bearing checking accounts, and investment accounts and products; and credit and debit cards, residential mortgages, and home equity loans, as well as direct and indirect loans, such as automotive, recreational vehicle, and consumer personal loans. The company's Global Wealth & Investment Management segment offers investment management, brokerage, banking, and trust and retirement products and services; and wealth management solutions, as well as customized solutions, including specialty asset management services. Its Global Banking segment provides lending products and services, including commercial loans, leases, commitment facilities, trade finance, and commercial real estate and asset-based lending; treasury solutions, such as treasury management, foreign exchange, and short-term investing options and merchant services; working capital management solutions; and debt and equity underwriting and distribution, and merger-related and other advisory services. The company's Global Markets segment offers market-making, financing, securities clearing, settlement, and custody services, as well as risk management products using interest rate, equity, credit, currency and commodity derivatives, foreign exchange, fixed-income, and mortgage-related products. As of December 31, 2021, it served approximately 67 million consumer and small business clients with approximately 4,200 retail financial centers; approximately 16,000 ATMs; and digital banking platforms with approximately 41 million active users. The company was founded in 1784 and is based in Charlotte, North Carolina.
ROIC (TTM)
4.6%
ROE (TTM)
10.5%
FCF Yield
16.08%
Based on trailing twelve-month data, BAC shows a free cash flow per share of N/A and a ROIC of 4.6%, key inputs for stock valuation using the DCF method. The P/FCF ratio of N/A and FCF yield of 16.08% are important context metrics when evaluating BAC's stock valuation relative to peers.
The intrinsic value of BAC depends on assumptions about future growth rate, discount rate (WACC), and terminal value. A DCF model discounts projected free cash flows back to present value — small changes in WACC can shift the estimate by 20% or more, which is why sensitivity analysis is essential.
Whether BAC is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $49.56. A positive margin of safety (intrinsic value above market price) suggests potential undervaluation, but the degree of confidence depends on the reliability of your growth and discount rate assumptions.
To perform a DCF valuation on Bank of America Corporation: (1) Start with the trailing free cash flow per share as the base, (2) project future FCF growth over 5-10 years based on Banks - Diversified industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting BAC's risk profile, and (4) add a terminal value for cash flows beyond the projection period.
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Bank of America Corporation, this means projecting how much free cash flow the Banks - Diversified will produce over the next 5-10 years, then discounting those amounts to today's dollars. BAC's ROIC of 4.6% suggests the company may face challenges generating returns above its cost of capital.
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For BAC, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
