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Will Bank of America’s 4Q16 Earnings Buoy Its Stock Further?

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Upcoming earnings release

Bank of America (BAC) is expected to announce its 4Q16 results before the market opens on January 13, 2017. Wall Street analysts expect it to post earnings per share (or EPS) of $0.38, 35% higher year-over-year (or YoY).

Bank of America’s net revenue is expected to be $21 billion in 4Q16, 7% higher YoY.

2016 has been a rough year for the financial sector. Banks entered 2016 expecting four rounds of interest rate hikes, but things didn’t turn out in their favor. Most banks (XLF) expect their earnings to improve in the fourth quarter, as trading activity has picked up following Donald Trump’s unexpected presidential victory.

The start of the fourth quarter witnessed improving macroeconomic fundamentals, and the Federal Reserve raised the interest rate 25 basis points, which could ease banks’ margins. Banks, which were in the spotlight in 2016, could see easing pressures in the upcoming quarter’s results.

In 2016, shares of Bank of America surged 34.5%. Comparatively, shares of Goldman Sachs (GS) and JPMorgan Chase slightly outperformed, generating returns of 35.6% and 35.2% in the year, respectively. Meanwhile, Wells Fargo (WFC) and Citigroup (C) rose 4.2% and 16.2%, respectively, in the year.

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Series overview

In this series, we’ll explore analysts’ expectations for Bank of America’s 4Q16 earnings. We’ll also look at Bank of America’s 4Q16 guidance, key earnings drivers, valuations, analyst ratings, and the impact of low interest rates on its earnings.

First, let’s look at what BAC’s management has to say about its 4Q16 earnings.

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