B of A Beneish M Score

BAC
 Stock
  

USD 36.55  1.30  3.43%   

This module uses fundamental data of B of A to approximate the value of its Beneish M Score. B of A M Score tells investors if the company management is likely to be manipulating earnings. The score is calculated using eight financial indicators that are adjusted by a specific multiplier. Please note, the M Score is a probabilistic model and cannot detect companies that manipulate their earnings with 100% accuracy. Continue to B of A Piotroski F Score and B of A Altman Z Score analysis.
  
B of A Long Term Debt is projected to decrease significantly based on the last few years of reporting. The past year's Long Term Debt was at 279.83 Billion. The current year Issuance Repayment of Debt Securities is expected to grow to about 60.7 B, whereas Total Debt is forecasted to decline to about 463.8 B. B of A Calculated Tax Rate is projected to increase significantly based on the last few years of reporting. The past year's Calculated Tax Rate was at 5.88. The current year Cash and Equivalents Turnover is expected to grow to 0.26, whereas PPandE Turnover is forecasted to decline to 8.52.
At this time, it appears that Bank Of America is an unlikely manipulator. The earnings manipulation may begin if B of A's top management creates an artificial sense of financial success, forcing the stock price to be traded at a high price-earnings multiple than it should be. In general, excessive earnings management by B of A executives may lead to removing some of the operating profits from subsequent periods to inflate earnings in the following periods. This way, the manipulation of B of A's earnings can lead to misrepresentations of actual financial condition, taking the otherwise loyal stakeholders on to the path of questionable ethical practices and plain fraud.
-2.87
Beneish M Score - Unlikely Manipulator
Elasticity of Receivables0.77Focus
Asset QualityN/AFocus
Expense Coverage0.87Focus
Gross Margin Strengs0.99Focus
Accruals Factor0.87Focus
Depreciation Resistance0.91Focus
Net Sales Growth1.17Focus
Financial Leverage Condition1.01Focus

B of A Beneish M-Score Indicator Trends

The cure to earnings manipulation is the transparency of financial reporting. It will typically remove the temptation of the top executives to inflate earnings (i.e., to promote the idea of 'winning at any cost'). Because a healthy internal audit department can enhance transparency, the board should promote the auditors' access to all the record-keeping systems across the enterprise. For example, if B of A's auditors report directly to the board (not management), the managers will be reluctant to manipulate simply due to the fear of punishment. On the other hand, the auditors will be free to investigate the ledgers properly because they know that the board has their back.
Current ValueLast YearChange From Last Year 10 Year Trend
Selling General and Administrative Expense50.8 B50.1 B
Fairly Up
Decreasing
Slightly volatile
Revenues109.5 B93.9 B
Fairly Up
Decreasing
Slightly volatile
Trade and Non Trade Receivables64.7 B72.3 B
Moderately Down
Decreasing
Very volatile
Property Plant and Equipment Net10.1 B10.8 B
Notably Down
Decreasing
Slightly volatile
Operating Income29.9 B29.4 B
Fairly Up
Increasing
Slightly volatile
Net Cash Flow from Operations(7.4 B)(7.2 B)
Fairly Down
Decreasing
Slightly volatile
Total Liabilities2409.1 B2899.4 B
Significantly Down
Increasing
Slightly volatile
Investments1891.9 B2000.3 B
Notably Down
Increasing
Slightly volatile
Gross Margin0.890.9
Fairly Down
Decreasing
Slightly volatile
Depreciation Amortization and AccretionB1.9 B
Sufficiently Up
Decreasing
Slightly volatile
Total Debt463.8 B496.2 B
Notably Down
Decreasing
Slightly volatile
Total Assets2657.7 B3169.5 B
Fairly Down
Increasing
Slightly volatile

Bank Of America Beneish M-Score Driver Matrix

One of the toughest challenges investors face today is learning how to quickly synthesize historical financial statements and information provided by the company, SEC reporting, and various external parties in order to detect the potential manipulation of earnings. Understanding the correlation between B of A's different financial indicators related to revenue, expenses, operating profit, and net earnings helps investors identify and prioritize their investing strategies towards B of A in a much-optimized way. Analyzing correlations between earnings drivers directly associated with dollar figures is the most effective way to find B of A's degree of accounting gimmicks and manipulations.

About B of A Beneish M Score

M-Score is one of many grading techniques for value stocks. It was developed by Professor M. Daniel Beneish of the Kelley School of Business at Indiana University and published in 1999 under the paper titled The Detection of Earnings Manipulation. The Beneish score is a multi-factor model that utilizes financial identifiers to compile eight variables used to classify whether a company has manipulated its reported earnings. The variables are built from the officially filed financial statements to create a final score call 'M Score.' The score helps to identify companies that are likely to manipulate their profits if they show deteriorating gross margins, operating expenses, and leverage against growing revenue.

Operating Expenses

57.75 Billion

B of A Operating Expenses is projected to decrease significantly based on the last few years of reporting. The past year's Operating Expenses was at 59.73 Billion

B of A Earnings Manipulation Drivers

Although earnings manipulation is typically not the result of intentional misconduct by the c-level executives, it is still a widespread practice by the senior management of public companies such as B of A. It is usually done by a series of misrepresentations of various accounting rules and operating activities across multiple financial cycles. The best way to spot the manipulation is to examine the historical financial statement to find inconsistencies in earning reports to find trends in assets or liabilities that are not sustainable in the future.
201720182019202020212022 (projected)
Trade and Non Trade Receivables61.62 B65.81 B55.94 B64.22 B72.26 B64.7 B
Revenues100.26 B110.58 B113.59 B93.75 B93.85 B109.46 B
Total Assets2,281.23 B2,354.51 B2,434.08 B2,819.63 B3,169.49 B2,657.69 B
Property Plant and Equipment Net9.25 B9.91 B10.56 B11 B10.83 B10.15 B
Depreciation Amortization and Accretion2.1 B2.06 B1.73 B1.84 B1.9 B1.99 B
Selling General and Administrative Expense46.95 B45.74 B47.49 B46.56 B50.08 B50.78 B
Total Liabilities2,014.09 B2,089.18 B2,169.27 B2,546.7 B2,899.43 B2,409.07 B
Total Debt436.93 B436.57 B430.17 B452.58 B496.2 B463.81 B
Operating Income32.61 B37.87 B36.34 B30.32 B29.38 B29.93 B
Net Cash Flow from Operations10.4 B39.52 B61.78 B37.99 B(7.19 B)(7.38 B)
Investments1,415.68 B1,433.14 B1,495.85 B1,650.33 B2,000.34 B1,891.87 B

B of A ESG Sustainability

Some studies have found that companies with high sustainability scores are getting higher valuations than competitors with lower social-engagement activities. While most ESG disclosures are voluntary and do not directly affect the long term financial condition, B of A's sustainability indicators can be used to identify proper investment strategies using environmental, social, and governance scores that are crucial to B of A's managers, analysts, and investors.
Environment Score
Governance Score
Social Score

About B of A Fundamental Analysis

The Macroaxis Fundamental Analysis modules help investors analyze Bank Of America's financials across various querterly and yearly statements, indicators and fundamental ratios. We help investors to determine the real value of B of A using virtually all public information available. We use both quantitative as well as qualitative analysis to arrive at the intrinsic value of Bank Of America based on its fundamental data. In general, a quantitative approach, as applied to this company, focuses on analyzing financial statements comparatively, whereas a qaualitative method uses data that is important to a company's growth but cannot be measured and presented in a numerical way.
Please read more on our fundamental analysis page.
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. The company was founded in 1784 and is based in Charlotte, North Carolina. B of A operates under BanksDiversified classification in the United States and is traded on New York Stock Exchange. It employs 213000 people.

B of A Investors Sentiment

The influence of B of A's investor sentiment on the probability of its price appreciation or decline could be a good factor in your decision-making process regarding taking a position in B of A. The overall investor sentiment generally increases the direction of a stock movement in a one-year investment horizon. However, the impact of investor sentiment on the entire stock markets does not have a solid backing from leading economists and market statisticians.
Investor biases related to B of A's public news can be used to forecast risks associated with investment in B of A. The trend in average sentiment can be used to explain how an investor holding B of A can time the market purely based on public headlines and social activities around Bank Of America. Please note that most equiteis that are difficult to arbitrage are affected by market sentiment the most.
B of A's market sentiment shows the aggregated news analyzed to detect positive and negative mentions from the text and comments. The data is normalized to provide daily scores for B of A's and other traded tickers. The bigger the bubble, the more accurate is the estimated score. Higher bars for a given day show more participation in the average B of A's news discussions. The higher the estimated score, the more favorable is the investor's outlook on B of A.

B of A Implied Volatility

    
  52.0  
B of A's implied volatility exposes the market's sentiment of Bank Of America stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if B of A's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that B of A stock will not fluctuate a lot when B of A's options are near their expiration.
Some investors attempt to determine whether the market's mood is bullish or bearish by monitoring changes in market sentiment. Unlike more traditional methods such as technical analysis, investor sentiment usually refers to the aggregate attitude towards B of A in the overall investment community. So, suppose investors can accurately measure the market's sentiment. In that case, they can use it for their benefit. For example, some tools to gauge market sentiment could be utilized using contrarian indexes, B of A's short interest history, or implied volatility extrapolated from B of A options trading.

Pair Trading with B of A

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if B of A position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in B of A will appreciate offsetting losses from the drop in the long position's value.

Moving together with B of A

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The ability to find closely correlated positions to B of A could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace B of A when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back B of A - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Bank Of America to buy it.
The correlation of B of A is a statistical measure of how it moves in relation to other equities. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as B of A moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Bank Of America moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for B of A can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching
Continue to B of A Piotroski F Score and B of A Altman Z Score analysis. Note that the Bank Of America information on this page should be used as a complementary analysis to other B of A's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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When running Bank Of America price analysis, check to measure B of A's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy B of A is operating at the current time. Most of B of A's value examination focuses on studying past and present price action to predict the probability of B of A's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move B of A's price. Additionally, you may evaluate how the addition of B of A to your portfolios can decrease your overall portfolio volatility.
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Is B of A's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of B of A. If investors know B of A will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about B of A listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth YOY
(0.047) 
Market Capitalization
303.6 B
Quarterly Revenue Growth YOY
0.009
Return On Assets
0.0089
Return On Equity
0.1
The market value of Bank Of America is measured differently than its book value, which is the value of B of A that is recorded on the company's balance sheet. Investors also form their own opinion of B of A's value that differs from its market value or its book value, called intrinsic value, which is B of A's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because B of A's market value can be influenced by many factors that don't directly affect B of A's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between B of A's value and its price as these two are different measures arrived at by different means. Investors typically determine B of A value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, B of A's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.