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However, BAC stock has declined 3.3% over the past three months and 8.4% over the past month to close yesterday’s trading session at $38.13. With BAC viewed as the most exposed to rates among large U.S. banks, the company continues to be impacted by the low-interest-rate environment. In addition, its Merrill Lynch unit needs to pay nearly $11.7 million to resolve claims that it overcharged customers who invested in unit investment trusts. Consequently, the stock looks overvalued at its current price level. In terms of forward P/S and P/B, its respective 3.69x and 1.26x are higher than the 3.17x and 1.14x industry averages. So, we think it’s wise to wait for a better entry point in the stock.
However, according to Globe Newswire, the global financial services market is expected to grow at a 9.9% CAGR of 9.9% to hit $22.5 trillion this year. So, it could be wise to bet on quality foreign financial companies Banco Santander, S.A. (SAN), Barclays PLC (BCS), and Deutsche Bank Aktiengesellschaft (DB) that are well-positioned to capitalize on the industry’s recovery.
