MMarketMath

BAC

StalwartQuality: Low (44/100)4 red flags

Bank of America · Financials · Diversified Banks

$62.33

52w 46.12 – 65.23

20y monthly, adjusted

Mkt cap

$435.9B

P/E

14.5

P/FCF

35.0

FCF yield

2.9%

ROE

10.1%

Shldr yield

6.7%

div 1.8% + bb 4.9%

What today's price assumes

At $435.9B, the market is pricing in 15.3% annual free-cash-flow growth for the next decade (10% discount rate, 2.5% terminal growth). Over the last ten years, FCF actually grew -7.8% per year — the price asks for acceleration beyond the historical record.

Simple DCF per-share range: $12 · $12 · $15 (4% / base / optimistic growth). An estimate, not a target.

Adjust the assumptions yourself →

Historical multiple lens

At its own median P/OCF of 5.7× across 15 years, BAC would trade near $10/share (25th–75th percentile: $5–$16); it trades at 34.6× today.

Assumes the historical multiple regime persists — re-ratings can be permanent.

Growth record

Compound annual growth rates from as-filed 10-K data, split-adjusted

Rev 3y

+6.0%

Rev 5y

+5.7%

Rev 10y

+3.1%

EPS 5y

+15.3%

EPS 10y

+11.3%

FCF 5y

−19.8%

FCF 10y

−7.8%

Fundamentals

Fiscal 2007–2025, from SEC filings

Revenue

2007: $66.8B
2008: $72.8B
2009: $119.6B
2010: $110.2B
2011: $93.5B
2012: $83.3B
2013: $88.9B
2014: $85.9B
2015: $83.0B
2016: $83.7B
2017: $87.1B
2018: $91.0B
2019: $91.2B
2020: $85.5B
2021: $89.1B
2022: $95.0B
2023: $102.8B
2024: $105.9B
2025: $113.1B
$0$50.0B$100.0B
07
11
15
19
23

Net income

2007: $15.0B
2008: $4.0B
2009: $6.3B
2010: −$2.2B
2011: $1.4B
2012: $4.2B
2013: $11.4B
2014: $5.5B
2015: $15.9B
2016: $17.8B
2017: $18.2B
2018: $28.1B
2019: $27.4B
2020: $17.9B
2021: $32.0B
2022: $27.5B
2023: $26.3B
2024: $27.0B
2025: $30.5B
$0$10.0B$20.0B$30.0B
07
11
15
19
23

Free cash flow

2007: $11.0B
2008: $4.0B
2009: $129.7B
2010: $82.5B
2011: $64.4B
2012: −$16.1B
2013: $92.8B
2014: $30.8B
2015: $28.4B
2016: $17.3B
2017: $9.9B
2018: $39.5B
2019: $61.8B
2020: $38.0B
2021: −$7.2B
2022: −$6.3B
2023: $45.0B
2024: −$8.8B
2025: $12.6B
$0$50.0B$100.0B
07
11
15
19
23

Diluted shares (lower is better)

2007: 4.5B
2008: 4.6B
2009: 7.7B
2010: 9.8B
2011: 10.3B
2012: 10.8B
2013: 11.5B
2014: 10.6B
2015: 11.2B
2016: 11.0B
2017: 10.8B
2018: 10.2B
2019: 9.4B
2020: 8.8B
2021: 8.6B
2022: 8.2B
2023: 8.1B
2024: 7.9B
2025: 7.7B
05.0B10.0B
07
11
15
19
23

Margins

0%50%100%07101316192225
Net marginFCF margin

Capital returned (dividends + buybacks)

2007: $14.7B
2008: $11.5B
2009: $4.9B
2010: $1.8B
2011: $1.7B
2012: $1.9B
2013: $4.9B
2014: $2.9B
2015: $4.5B
2016: $7.7B
2017: $16.8B
2018: $25.5B
2019: $34.3B
2020: $13.3B
2021: $31.7B
2022: $12.0B
2023: $11.9B
2024: $20.9B
2025: $29.5B
$0$10.0B$20.0B$30.0B
07
11
15
19
23

Cash vs long-term debt

$0$200.0B$400.0B07101316192225
CashLT debt

Quarterly

Discrete quarters from 10-Q filings; Q4 derived as fiscal year minus Q1–Q3. OCF is unwound from the year-to-date figures 10-Qs report. Compare to the same quarter a year ago — most businesses are seasonal.

Revenue by quarter

Q2'23: $25.2B
Q3'23: $25.2B
Q4'23: $26.1B
Q1'24: $25.8B
Q2'24: $25.4B
Q3'24: $25.3B
Q4'24: $29.3B
Q1'25: $28.2B
Q2'25: $27.4B
Q3'25: $28.1B
Q4'25: $29.3B
Q1'26: $30.3B
Q2'26: $31.6B
$0$10.0B$20.0B$30.0B
23
24
24
25
26

Net income by quarter

Q2'23: $7.4B
Q3'23: $7.8B
Q4'23: $2.9B
Q1'24: $6.7B
Q2'24: $6.9B
Q3'24: $6.9B
Q4'24: $6.5B
Q1'25: $7.4B
Q2'25: $7.2B
Q3'25: $8.5B
Q4'25: $7.5B
Q1'26: $8.6B
Q2'26: $9.1B
$0$2.5B$5.0B$7.5B
23
24
24
25
26
QuarterRevenueYoYNet incomeYoYEPSOCF
Q2'26$31.6B+15.0%$9.1B+26.6%1.21$29.0B
Q1'26$30.3B+7.2%$8.6B+16.6%1.11$41.8B
Q4'25 *$29.3B+0.0%$7.5B+15.4%0.96−$22.9B
Q3'25$28.1B+10.8%$8.5B+22.8%1.06$46.9B
Q2'25$27.4B+8.1%$7.2B+4.0%0.90−$9.1B
Q1'25$28.2B+9.4%$7.4B+10.3%0.89−$2.2B
Q4'24 *$29.3B+12.1%$6.5B+121.7%0.79$25.9B
Q3'24$25.3B+0.7%$6.9B−11.6%0.81−$37.3B
Q2'24$25.4B+0.7%$6.9B−6.9%0.83$18.1B
Q1'24$25.8B−1.7%$6.7B−18.2%0.76−$15.5B
Q4'23 *$26.1B+6.6%$2.9B−58.9%0.33$32.7B
Q3'23$25.2B+2.7%$7.8B+10.2%0.90$11.8B
Q2'23$25.2B+11.1%$7.4B+18.6%0.88$11.8B

Track record

Compound annual growth by period. For debt and share count, negative is the good direction.

Series3y5y10y15y
Revenue+6.0%+5.7%+3.1%+0.2%
Operating cash flow−19.8%−19.8%−7.8%−11.8%
Free cash flow−19.8%−19.8%−7.8%−11.8%
EPS (diluted)+6.1%+15.3%+11.3%+12.2%
Equity+3.5%+2.1%+1.7%+1.9%
LT debt+4.8%+3.9%+3.0%−2.3%
Diluted shares−2.0%−2.7%−3.7%−1.6%
Stock price+32.5%+11.0%+17.0%+16.5%

$100, 3 years ago

$232vs $176 in SPY

32.5% vs 20.7%/yr

$100, 5 years ago

$169vs $181 in SPY

11.0% vs 12.6%/yr

$100, 10 years ago

$480vs $412 in SPY

17.0% vs 15.2%/yr

$100, 15 years ago

$989vs $813 in SPY

16.5% vs 15.0%/yr

The $1 test — market value created per $1 of earnings retained (Buffett's hurdle: at least $1)

Last 5 years

$1.65

$175.6B created / $106.5B retained

Last 10 years

$1.45

$278.0B created / $191.5B retained

Quality & capital discipline

Cash-based returns and how management deploys capital

Cash ROIC

2.0%

OCF ÷ (equity + debt)

OCF / EV yield

2.4%

MC vs 10× OCF

3.50

≤1 = priced under 10× OCF

Debt / FCF

25.2y

SBC / FCF

31.7%

Owner earnings

$8.6B

OCF − capex − SBC

OE yield

1.9%

Share count 5y

+3.1%

per year; negative = buybacks

Growth engine (5y): reinvested 662.9% of operating cash flow at an incremental return of -10.9% — an organically fundable growth rate of about -72.0% per year (growth ≈ reinvestment rate × incremental ROIC).

Checklist

12 of 24 checks pass · 50%. Checks with structurally missing inputs are excluded.

Growth & Consistency

4/7

  • Revenue growth

    5.7% · 5y CAGR ≥ 5%

    pass

  • EPS growth

    15.3% · 5y CAGR ≥ 5%

    pass

  • FCF growth

    -19.8% · 5y CAGR ≥ 5%

    fail

  • Revenue rises consistently

    8 of 9 · up in ≥ 7 of last 10 years

    pass

  • FCF consistently positive

    7 of 10 · positive in ≥ 8 of last 10 years

    fail

  • Profitable every year

    10 of 10 · net income > 0 in ≥ 8 of last 10

    pass

  • Cash flow keeps up with sales

    -19.8% vs 5.7% · OCF CAGR ≥ 0.9× revenue CAGR

    fail

Profitability

2/5

  • Net margin

    27.0% · ≥ 8%

    pass

  • Operating margin

    — · ≥ 10%

    na

  • Gross margin stable or rising

    — · no drop > 2 pts over 3y

    na

  • Return on equity

    10.1% · ≥ 12%

    fail

  • Cash ROIC

    2.0% · ≥ 12%

    fail

  • FCF margin

    11.2% · ≥ 5%

    pass

  • Earnings back their cash

    OCF $12.6B vs NI $30.5B · OCF ≥ net income (latest FY)

    fail

Balance Sheet

3/4

  • Debt payable from cash flow

    25.2y · LT debt ≤ 3× FCF

    fail

  • Cash cushion

    73% · cash ≥ 50% of LT debt

    pass

  • Leverage

    1.05 · LT debt ≤ 1.5× equity

    pass

  • Equity positive and compounding

    $303.2B · equity > 0 and grew over ~5y

    pass

  • Interest burden

    — · interest ≤ 15% of operating income

    na

Capital Allocation

1/4

  • Share count flat or shrinking

    3.1% · ≤ +0.5%/yr over ~5y

    fail

  • Stock comp restrained

    32% · SBC ≤ 15% of FCF

    fail

  • Distributions funded by FCF

    234% · dividends + buybacks ≤ 100% of FCF

    fail

  • Repurchases are a habit

    10 of 10 · buybacks in ≥ 5 of last 10 years

    pass

Valuation Discipline

2/4

  • FCF yield

    2.9% · ≥ 3%

    fail

  • Earnings multiple

    14.5 · P/E ≤ 25

    pass

  • Price asks less than history delivered

    15.3% vs -7.8% · implied FCF growth ≤ historical FCF CAGR

    fail

  • Shareholder yield

    6.7% · dividends + buybacks ≥ 2% of market cap

    pass

Red flags

Mechanical checks — a flag is a question to investigate, not a verdict

Heavy debt load

Long-term debt exceeds 5 years of free cash flow.

Heavy stock compensation

Stock-based compensation consumes more than 30% of free cash flow.

Shareholder dilution

Diluted share count has grown by more than 2% per year over ~5 years.

Distributions exceed FCF

Dividends plus buybacks exceeded free cash flow in the latest fiscal year.

Financial data

As filed in 10-Ks; per-share figures split-adjusted. $ in millions.

FYRevenueGross profitOp incomeNet incomeEPSOCFCapExFCFDividendsBuybacksSBCCashLT debtEquityShares
2025113,097——30,5093.8112,613—12,6138,08321,4334,001231,845317,816303,2437,681
2024105,856——26,9733.19-8,805—-8,8057,82213,1043,433290,114283,279293,9637,936
2023102,769——26,3053.0544,982—44,9827,3744,5762,942333,073302,204290,2098,081
202294,950——27,5283.19-6,327—-6,3276,9635,0732,862230,203275,982273,1978,168
202189,113——31,9783.57-7,193—-7,1936,57525,1262,768348,221280,117270,0668,558
202085,528——17,8941.8737,993—37,9936,2897,0252,031380,463262,934272,9248,797
201991,244——27,4302.7561,777—61,7776,14628,1441,974161,560240,856264,8109,443
201891,020——28,1472.6139,520—39,5205,42420,0941,729177,404229,392265,32510,237
201787,126——18,2321.569,864—9,8644,02712,8141,649157,434227,402267,14610,778
201683,701——17,8221.4917,277—17,2772,5735,1121,367147,738216,823266,19511,047
201582,965——15,9101.3128,397—28,3972,0912,374-89159,353236,764255,61511,236
201485,894——5,5200.4230,795—30,7951,2621,67578138,589243,139243,47610,585
201388,942——11,4310.9092,817—92,8171,6773,2202,280131,322249,674232,47511,491
201283,334——4,1880.25-16,056—-16,0561,90902,270110,752275,585236,95610,841
201193,454——1,4460.0164,448—64,4481,738—2,600120,102372,265230,10110,255
2010110,220——-2,238-0.3782,541—82,5411,762—2,000108,427448,431228,2489,790
2009119,643——6,276-0.29129,731—129,7314,86302,400121,339522,877231,4447,729
200872,782——4,0080.544,034—4,03411,528088532,857268,292177,0524,596
200766,833——14,9823.2911,036—11,03610,8783,790—42,531—146,8034,463

Some concepts are structurally absent for certain industries (banks report no gross profit or capex). Missing ≠ zero.

Compare with peers →·10-K filings on EDGAR ↗