Wondering if Bank of America is still worth buying after its big run over the years, or if most of the upside is already priced in? In this article we unpack what the market is signaling about its true value.
The stock has climbed 2.1% over the last week, 1.0% over the past month, and is up 22.1% year to date, adding to a longer term gain of 110.8% over five years. This puts recent moves into a much bigger context.
Recent headlines have focused on large US banks navigating higher for longer interest rate expectations and evolving regulatory proposals. Both of these factors directly influence how investors think about profitability and risk. At the same time, ongoing discussion around credit quality and consumer health has kept sentiment toward major lenders like Bank of America shifting more quickly than usual.
Right now, Bank of America scores just 2/6 on our valuation checks, which suggests that while parts of the stock look cheap, others may be closer to fair value. In the sections that follow we walk through different valuation approaches to see what they indicate, then finish with a more holistic way to think about what Bank of America might really be worth.
Bank of America scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
The Excess Returns model looks at how much profit a company can generate above the return that shareholders require, and then capitalizes those surplus returns into an intrinsic value per share.
For Bank of America, the starting point is its Book Value of $37.95 per share and a Stable EPS of $4.57 per share, based on weighted future return on equity estimates from 11 analysts. Against a Cost of Equity of $3.68 per share, this implies an Excess Return of $0.89 per share, meaning the bank is expected to earn more than the minimum return investors demand. The Average Return on Equity of 11.16% supports this, and analysts also see Stable Book Value growing to about $40.94 per share over time, based on forecasts from 14 analysts.
Combining these assumptions, the Excess Returns valuation points to an intrinsic value of about $56.52 per share, which suggests Bank of America is roughly 4.3% undervalued relative to its current price, effectively close to fair value.
Result: ABOUT RIGHT
Bank of America is fairly valued according to our Excess Returns, but this can change at a moment’s notice. Track the value in your watchlist or portfolio and be alerted on when to act.
BAC Discounted Cash Flow as at Dec 2025
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Bank of America.
For a mature, consistently profitable bank like Bank of America, the price to earnings ratio is a practical way to judge value because it directly links what investors pay to the profits the business is generating today. In general, companies with stronger, more reliable growth and lower perceived risk tend to justify a higher PE multiple, while slower growth or higher risk usually warrants a discount.
Bank of America currently trades on a PE of 13.98x, slightly above the broader Banks industry average of 11.48x and roughly in line with the peer group at 13.72x. Simply Wall St also calculates a Fair Ratio of 16.31x, which represents the PE multiple the stock might reasonably command given its earnings growth profile, profitability, industry, size and risk factors. This tailored Fair Ratio is more informative than a simple peer or industry comparison because it adjusts for the specific strengths and vulnerabilities of Bank of America rather than assuming all banks deserve the same multiple.
Comparing the current PE of 13.98x to the Fair Ratio of 16.31x suggests the market is still pricing the stock at a modest discount to its fundamentals.
Result: UNDERVALUED
NYSE:BAC PE Ratio as at Dec 2025
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1441 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a smarter, more dynamic way to invest that connects the story you believe about Bank of America to hard numbers like future revenue, earnings, margins and ultimately a Fair Value estimate you can compare with today’s share price to inform your decision to buy, hold or sell.
On Simply Wall St, Narratives live in the Community page and are used by millions of investors as an accessible tool to turn their views about catalysts, risks and the macro environment into a forward-looking forecast. This then flows into a valuation that automatically updates when new information such as earnings, news or regulatory changes arrives.
For example, one Bank of America Narrative may assume relatively cautious growth, regulatory headwinds and a Fair Value around $43.34 per share. Another more optimistic Narrative might expect stronger digital adoption, resilient margins and a Fair Value closer to $58.90. This illustrates how two investors can look at the same bank, plug in different but reasonable assumptions, and arrive at different yet transparent conclusions about what the stock is worth today.
For Bank of America, however, we will make it really easy for you with previews of two leading Bank of America narratives:
🐂 Bank of America Bull Case
Fair value estimate: $58.90 per share
Implied undervaluation: -6.8%
Forecast revenue growth: 7.82%
Builds on ongoing investment in digital engagement and AI to support mid single digit earnings growth and slightly higher profit margins.
Assumes disciplined asset repricing, net interest income growth and steady share buybacks that lift earnings per share while keeping credit quality intact.
Arrives at an analyst consensus fair value close to the current price, framing Bank of America as broadly fairly valued with selective upside if execution stays on track.
🐻 Bank of America Bear Case
Fair value estimate: $43.34 per share
Implied overvaluation: 24.8%
Forecast revenue growth: 10.59%
Recognizes Bank of America’s strong franchise, digital progress and resilient net interest income, but sees current valuation as rich versus a more conservative long term outlook.
Highlights macro and policy risks, from rate cuts and recession threats to shifting regulation and the signaling impact of Warren Buffett trimming his stake.
Models solid but slower earnings growth, moderating buybacks and a lower future PE multiple, which together point to a present value meaningfully below today’s share price.
Do you think there’s more to the story for Bank of America? Head over to our Community to see what others are saying!
NYSE:BAC Community Fair Values as at Dec 2025
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.
Companies discussed in this article include BAC.
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