• Investors may be wondering if Bank of America at around US$52.75 is still offering value or if most of the opportunity has already been priced in.
• The stock has had a mixed run, with a 1.3% decline over the last 7 days, a 4.9% gain over the last month, a 5.7% decline year to date, a 29.7% return over the past year, and a 108.2% return over 3 years.
• Recent coverage has focused on how large US banks are positioned as interest rate expectations shift and how regulatory discussions could influence capital requirements for the sector. Commentary around credit quality, deposit trends, and the competitive position of the biggest US lenders has also helped frame how investors view the risk and reward balance for Bank of America.
• Right now, Bank of America scores 4 out of 6 on our valuation checks, giving it a value score of 4/6. The rest of this article will compare different valuation approaches to that score and will also hint at a broader, more holistic way to think about what the stock is really worth by the end.

Approach 1: Bank of America Excess Returns Analysis

The Excess Returns model evaluates how much profit a company is expected to generate above the return that shareholders require, based on its equity cost. Instead of focusing on cash flows, it focuses on how efficiently equity capital is used and how that compounds over time.

For Bank of America, the starting point is a Book Value of US$38.66 per share and a Stable EPS of US$5.22 per share, based on weighted future Return on Equity estimates from 15 analysts. The Average Return on Equity is 12.12%, while the Cost of Equity is US$3.87 per share. That leaves an Excess Return of US$1.36 per share, which represents the value created above the required return.

The Stable Book Value is estimated at US$43.10 per share, based on weighted future Book Value estimates from 14 analysts. Using these inputs in the Excess Returns model gives an estimated intrinsic value of about US$68.11 per share, which implies the stock is 22.6% undervalued relative to the current price around US$52.75.

Result: UNDERVALUED

Our Excess Returns analysis suggests Bank of America is undervalued by 22.6%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

Approach 2: Bank of America Price vs Earnings

P/E is often a useful yardstick for profitable companies because it links what you are paying directly to the earnings the company is already generating. The higher the expected growth and the lower the perceived risk, the more investors are usually willing to pay in the form of a higher P/E ratio. When growth is more modest or risk is higher, a lower P/E is often seen as more appropriate.

Bank of America currently trades on a P/E of 12.37x. This sits above the Banks industry average P/E of 11.37x, but below the peer group average of 13.13x. Simply Wall St also calculates a proprietary “Fair Ratio” of 15.07x for Bank of America. This Fair Ratio reflects what investors might reasonably pay given factors such as the company’s earnings profile, its industry, profit margins, market cap and risk characteristics, rather than relying only on simple peer or industry averages.

Because the Fair Ratio of 15.07x is higher than the current P/E of 12.37x, this approach suggests the stock may be trading at a discount relative to that fair multiple.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Bank of America Narrative

Earlier it was mentioned that there is an even better way to understand valuation. It is worth introducing Narratives, which are simple stories investors create about a company that connect their view of its future revenue, earnings and margins to a fair value estimate, and then compare that fair value to the current share price.

On Simply Wall St, Narratives are available on the Community page and are used by millions of investors as an accessible way to turn a company’s story into a financial forecast that can help decide whether the current price looks high or low compared to their own fair value range.

Narratives also update as new information arrives, so when Bank of America reports earnings, updates guidance, or appears in the news, the underlying forecasts and fair value estimates in each Narrative can be refreshed without you needing to rebuild everything from scratch.

For Bank of America, one investor Narrative on Simply Wall St currently points to a fair value of about US$41 per share, while another points to around US$62.72 per share. This shows how two investors can look at the same bank, plug in different assumptions, and then compare those fair values to the market price to decide whether the stock looks closer to an opportunity or fully priced for their own view.

For Bank of America, here are previews of two leading Bank of America narratives to make comparison easier:

Fair value: US$62.72 per share

Valuation gap: about 15.9% undervalued versus the current price around US$52.75

Revenue growth used in the narrative: 6.79% a year

• Highlights investment in digital engagement, AI, and higher quality loan growth as potential supports for revenue and earnings, while acknowledging risks from economic volatility, policy shifts, and litigation costs.
• Relies on analyst assumptions for mid single digit revenue growth, broadly stable profit margins, ongoing buybacks, and an eventual P/E of 13.3x applied to forecast earnings.
• Frames the US$62.72 consensus target as contingent on revenue reaching about US$133.5b, earnings of US$36.8b, and a discount rate of 8.85%, and encourages you to check whether those inputs fit your own view of the bank.

Fair value: US$43.34 per share

Valuation gap: about 21.7% overvalued versus the current price around US$52.75

Revenue growth used in the narrative: 10.59% a year

• Argues that while Bank of America benefits from scale, deposit strength, and digital progress, the sector faces interest rate sensitivity, regulatory risk, and shifting sentiment, including around Berkshire Hathaway’s stake.
• Assumes steady but measured growth in net interest income and non interest revenue, cost efficiencies, moderated buybacks, and an 11x P/E, which together point to a present value closer to US$43.34 per share.
• Flags both upside risks such as stronger economic activity or lighter regulation, and downside risks such as recession, tighter rules, or a larger Berkshire exit, and uses those to frame the fair value range rather than a single outcome.

Seeing both narratives side by side provides a practical valuation range for Bank of America, along with the key assumptions that sit behind each story, so you can decide which set of inputs aligns more closely with your own expectations before making any portfolio moves.

Do you think there's more to the story for Bank of America? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.