BAC Trades at a Discount to Industry: Right Time to Buy the Stock?

Bank of America BAC stock is currently trading at a 12-month trailing price-to-tangible book (P/TB) of 2.04X, which is below the industry’s 3.42X. This shows the stock is trading at a discount.

P/TB Ratio (TTM)
 

BAC stock is also attractively priced compared with peers such as JPMorgan JPM and Wells Fargo WFC, which are trading at higher multiples of 3.18X and 2.11X, respectively.

Let us dig deeper to understand if the current valuation makes Bank of America a smart bet. 

Bank of America stock has appreciated 20.6% in a year, outperforming the Zacks Finance sector and the S&P 500 Index. It has also pulled ahead of key peers, with JPMorgan up 17.1% and Wells Fargo gaining 18.8%.

1 Year Price Performance
 

With a cheaper valuation and an upbeat price performance, let’s find out what awaits Bank of America this year.

Factors to Consider for Bank of America in 2026

Interest Rate Cuts: The Federal Reserve lowered rates three times last year, to a range of 3.5% to 3.75%, following a 100-basis-point (bp) cut in 2024. Being one of the most interest rate-sensitive U.S. banks, BAC’s net interest income (NII) is expected to face pressure as interest rates come down. However, fixed-rate asset repricing, higher loan and deposit balances and a gradual fall in funding costs are expected to offset the adverse impact of lower rates. 

As rates decline, lending activity is expected to increase. Also, easing regulatory capital requirements will help channel excess capital into loan growth, particularly within resilient commercial and consumer segments. Hence, Bank of America is likely to witness a decent demand for loans, which will support NII expansion. Over the medium term, the company expects loans and deposits to witness a CAGR of 5% and 4%, respectively. 
 
Bank of America projects a 5-7% year-over-year increase in NII for 2026, after reporting 7.2% growth in 2025. Similarly, JPMorgan and Wells Fargo are expected to demonstrate resilience and steady growth in NII. For 2026, JPM expects NII to be almost $103 billion, up 7.4% from $95.9 billion in 2025. Further, WFC projects 2026 NII to be approximately $50 billion, up 5.3%. 

Network Expansion & Digital Reach: Bank of America is highly focused on its financial centers as a core part of its growth strategy, combining digital and physical convenience for clients. The company operates 3,628 financial centers nationwide and is actively expanding its footprint, particularly in high-growth markets. Since 2019, it has opened roughly 300 new financial centers and renovated more than 100.

BAC has entered 18 new markets since 2014 and plans to open financial centers in six additional markets through 2028. This expansion has already added 170 new financial centers and $18 billion in incremental deposits in those markets. The bank views the physical network as critical to driving core deposit and account growth, even in a heavily digital era, thanks to client preference for local, trusted in-person advice and expanded relationship opportunities.

The bank's strategic investment in new financial centers and expansion into new markets reflects a broader industry shift toward optimizing branch networks to deepen customer relationships and tap into new business opportunities. In this competitive environment, the ability to blend digital convenience with in-person expertise is expected to give Bank of America long-term leverage in the evolving banking landscape.

The company plans to continue strengthening its technology initiatives and spend heavily on these. These efforts help it attract and retain customers and boost cross-selling opportunities.

Fortress Balance Sheet & Solid Liquidity: Bank of America’s liquidity profile remains solid. As of Dec. 31, 2025, average global liquidity sources totaled $975 billion. The company’s investment-grade long-term credit ratings of A1, A- and AA- from Moody’s, S&P Global Ratings and Fitch Ratings, respectively, and a stable outlook facilitate easy access to the debt market.

BAC continues to reward shareholders handsomely. The company cleared the 2025 stress test conducted by the Fed and raised the dividend by 8% to 28 cents per share. In the past five years, it has raised dividends five times, with an annualized growth rate of 8.64%. 

Similarly, JPMorgan and Wells Fargo cleared their stress tests and announced higher quarterly dividends. JPMorgan declared a quarterly dividend of $1.50 per share, representing a rise of 7% from the prior payout. Wells Fargo announced a 12.5% increase in its quarterly dividend to 45 cents per share.

Additionally, Bank of America has announced a new share repurchase plan under which it is authorized to buy back $40 billion worth of shares. The company intends to buy back shares worth $4.5 billion every quarter in the near term. 

Investment Banking (IB) Business: As global deal-making came to a grinding halt at the beginning of 2022, it weighed heavily on Bank of America’s IB business. Though the company’s total IB fees plunged in 2022 and 2023, the trend reversed thereafter. In 2024, the company’s IB fees soared 31.4% year over year. Then again, in 2025, IB fees increased 8.4% on a year-over-year basis. As the market for global mergers and acquisitions (M&As) has been improving, the company will continue to witness solid growth in IB fees, driven by a healthy IB pipeline.

Additionally, Bank of America targets mid-single-digit CAGR in IB fees and a 50 to 100-bp market share gain over the medium term. Management plans to deepen integration between corporate and IB, expand middle-market coverage and pursue more large deals. Growth will be driven by AI-enabled insights, senior talent and holistic capital solutions, including private credit and alternative investments, while leveraging its global client reach across 87 jurisdictions.

Asset Quality: Bank of America’s asset quality has been deteriorating. While the company recorded negative provisions in 2021, a substantial jump in provisions occurred in the following years due to a worsening macroeconomic outlook. The metric surged 115.4% in 2022, 72.8% in 2023 and 32.5% in 2024. Similarly, net charge-offs (NCOs) grew 74.9% in 2023 and 58.8% in 2024. 

Though both provisions and NCOs declined last year, asset quality is less likely to improve much in the near term. BAC remains vigilant about the effects of continuous high rates on its loan portfolio. The impact of tariffs on inflation is now clearly visible, with numbers remaining sticky.

What Should Investors Do With Bank of America Stock?

Over the past month, the Zacks Consensus Estimate for 2026 and 2027 earnings has been revised down to $4.30 and $4.93, respectively. The consensus estimate for earnings indicates 12.9% and 14.3% growth for 2026 and 2027, respectively. 

Bank of America Earnings Estimates
 

Bank of America remains a noteworthy name, backed by a below-industry P/TB valuation, strong one-year outperformance and multiple levers that can sustain earnings power. Even with rate cuts, management expects mid-single-digit NII growth in 2026. Add in continued network and digital investments, a deep liquidity cushion and shareholder-friendly actions, BAC offers an attractive risk-reward for long-term investors.

That said, the case to add aggressively is less compelling right now. Earnings estimates for 2026-2027 have moved lower, and asset-quality metrics remain a key watch item despite the recent easing in provisions and NCOs. With the macro backdrop still uncertain, BAC looks best positioned as a retain-and-monitor stock rather than a fresh accumulation.

At present, Bank of America carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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