Bank of America Corporation (BAC) Discounted Future Market Cap

Bank of America Corporation

BAC (NYSE)

(%)

Valuation
Bank of America Corporation Discounted Future Market Cap

"""
    Model: Discounted Future Market Cap

# Render model description
model.render_description(r"""
## Discounted Future Market Cap

This model estimates the intrinsic value of a common share by projecting the Future Market Capitalization using the estimated PE Ratio and then discounting it to the Present using an Annual Required Rate of Return.
""")

# Initialize assumptions
assumptions.init({
    "data": {
        "%discount_rate": None,
        "beta": data.get("profile:beta", default=1),
        "%risk_free_rate": data.get("treasury:year10"),
        "%market_premium": data.get("risk:totalEquityRiskPremium"),
        "pe_ratio": data.get("ratio:priceEarningsRatio"),
        "%revenue_growth_rate": None,
        "%net_income_margin": None,
        "historical_years": 10,
        "projection_years": 5,
    },
    "hierarchies": [{
        "parent": "%discount_rate",
        "children": ["beta", "%risk_free_rate", "%market_premium"]
    }]
})

# Calculate cost of equity
cost_of_equity = assumptions.get("%risk_free_rate") + assumptions.get("beta") * assumptions.get("%market_premium")
assumptions.set("%discount_rate", cost_of_equity)

# Compute metrics
data.compute({
    "%grossMargin": "income:grossProfit / income:revenue",
    "%operating_margin": "income:operatingIncome / income:revenue",
    "%netMargin": "income:netIncome / income:revenue",
    "%revenueGrowthRate": "function:growth:income:revenue",
    "%netIncomeGrowthRate": "function:growth:income:netIncome",
    "%totalStockholdersEquityGrowthRate": "function:growth:balance:totalStockholdersEquity",

# Calculating NOPAT (Net Operating Profit After Taxes)
    "%taxRate": "income:incomeTaxExpense / income:incomeBeforeTax",
    "incomeTax": "income:operatingIncome * %taxRate",
    "nopat": "income:operatingIncome - incomeTax",

# Calculating Invested Capital
    "investedCapital": [
        "balance:totalNonCurrentAssets", "-", "balance:cashAndCashEquivalents", "+",
        "balance:totalCurrentAssets", "-", "balance:totalCurrentLiabilities"
    ],
    "%roic": "nopat / investedCapital",
})

data.set_default_range(f"{-assumptions.get('historical_years')}->0")

assumptions.set("%net_income_margin", data.average(f"%netMargin"))
assumptions.set_bounds(
    "%net_income_margin", low=0, high="100%"
)

assumptions.set("%revenue_growth_rate", data.average(f"%revenueGrowthRate"))
assumptions.set_bounds(
    "%revenue_growth_rate", low=0, high="25%"
)

# Compute forecasted values and ratios
data.compute({
    "income:revenue": f"""
        income:revenue:-1 * 
        (1 + {assumptions.get('%revenue_growth_rate')})
    """,
    "%revenueGrowthRate": "function:growth:income:revenue",
    "income:netIncome": f"income:revenue * {assumptions.get('%net_income_margin')}",
}, forecast=assumptions.get("projection_years"))

projected_revenue = data.get("income:revenue")
projected_net_income = data.get(f"income:netIncome:{assumptions.get('projection_years')}")

shares_outstanding = data.get("income:weightedAverageShsOut")
future_market_cap = assumptions.get("pe_ratio") * projected_net_income
discounted_future_market_cap = future_market_cap / (
            (1 + assumptions.get("%discount_rate")) ** assumptions.get("projection_years"))

stock_value = discounted_future_market_cap / shares_outstanding

# Set the final value
model.set_final_value({
    "value": stock_value,
    "units": "$"
})

# Render results
model.render_results([
    [stock_value, "Present Value", "$"],
    [projected_net_income, "Estimated net income", "$"],
    [future_market_cap, "Estimated market capitalization", "$"],
    [discounted_future_market_cap, "Market capitalization discounted to present", "$"],
    [shares_outstanding, "Shares Outstanding", "#"],
    [data.get("income:eps"), "Earnings Per Share (EPS)", "$"],
    [data.get("profile:price"), "Market Price", "$"],
    [data.get("ratio:priceEarningsRatio"), "Price to Earnings (PE) Ratio", "#"]
])

# Render chart
model.render_chart({
    "data": {
        "income:revenue": "Revenue",
        "income:netIncome": "Net Income"
    },
    "start": -assumptions.get("historical_years"),
    "end": "*",
    "properties": {
        "title": "Historical and forecasted data",
        "set_editable": [
            "income:revenue",
            "income:netIncome"
        ]
    }
})

# Render table for estimated future values
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
    },
    "start": -1,
    "end": "*",
    "properties": {
        "title": "Estimated Future Values",
        "order": "ascending",
        "number_format": "M"
    }
})

# Render historical values table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "income:costOfRevenue": "Cost of Revenue",
        "income:grossProfit": "Gross Profit",
        "%grossMargin": "Gross Margin",
        "income:operatingIncome": "Operating Income",
        "%operating_margin": "Operating Margin",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Values",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Render historical growth rates table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
        "%netIncomeGrowthRate": "Net Income Growth Rate",
        "balance:totalStockholdersEquity": "Stockholders Equity",
        "%totalStockholdersEquityGrowthRate": "Equity Growth Rate",
        "%roic": "Return on Invested Capital (ROIC)",
        "nopat": "After-tax Operating Income",
        "%taxRate": "Income Tax Rate",
        "investedCapital": "Invested Capital",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Growth Rates",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Set description for assumptions
assumptions.set_description({
    "%discount_rate": r"""
        ## Discount Rate

`Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium`

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

[Read More](https://www.investopedia.com/terms/c/costofequity.asp#mntl-sc-block_1-0-20)
    """,

"beta": r"""
        ## Beta

Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.
    """,

"%risk_free_rate": r"""
        ## Risk-Free Rate

The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.
        By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.
    """,

"%market_premium": r"""
        ## Market Premium

Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.
    """,

"pe_ratio": r"""
        ## Price to Earnings (PE) Ratio

Estimated Price to Earnings (PE) Ratio at the end of the projection period.

`Future Market Cap` = `PE Ratio` * `Projected Net Income`
    """,

"%revenue_growth_rate": r"""
        ## Revenue Growth Rate

The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.
    """,

"%net_income_margin": r"""
        ## Net Income Margin

Net Income expressed as a percentage of Revenue.
    """,

"historical_years": r"""
        ## Historical Years

The number of historical years used to calculate averages for historical data.
    """,

"projection_years": r"""
        ## Projection Years

The number of years for projecting the analysis into the future.
    """,
})

print("End of model.")

Estimated Value

USD

Market Price USD

* Values are not guaranteed, please do your own
research before making investment decisions.

Discounted Future Market Cap

Interactive Assumptions

Discount Rate Discount Rate `Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium` The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula. Read More	%
↳ Beta Beta Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.	#
↳ Risk Free Rate Risk-Free Rate The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.	%
↳ Market Premium Market Premium Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.	%
Pe Ratio Price to Earnings (PE) Ratio Estimated Price to Earnings (PE) Ratio at the end of the projection period. `Future Market Cap` = `PE Ratio` * `Projected Net Income`	#
Revenue Growth Rate Revenue Growth Rate The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.	%
Net Income Margin Net Income Margin Net Income expressed as a percentage of Revenue.	%
Historical Years Historical Years The number of historical years used to calculate averages for historical data.	#
Projection Years Projection Years The number of years for projecting the analysis into the future.	#

Results
Present Value	57.79 USD
Estimated net income	56.3 Bil. USD
Estimated market capitalization	674.6 Bil. USD
Market capitalization discounted to present	425.6 Bil. USD
Shares Outstanding	7.36 Bil.
Earnings Per Share (EPS)	3.88 USD
Market Price	49.83 USD
Price to Earnings (PE) Ratio	11.98

Historical and forecasted data

Monetary values in USD

{"sectionId": "section-chart-1", "sectionType": "chart", "title": "Historical and forecasted data", "timeseries": "annual", "series": [{"label": "Revenue", "mappingKey": "income:revenue", "data": [{"l": "2016", "x": "2016-12-31", "y": 93662000000}, {"l": "2017", "x": "2017-12-31", "y": 99466000000}, {"l": "2018", "x": "2018-12-31", "y": 109627000000}, {"l": "2019", "x": "2019-12-31", "y": 113589000000}, {"l": "2020", "x": "2020-12-31", "y": 93753000000}, {"l": "2021", "x": "2021-12-31", "y": 93851000000}, {"l": "2022", "x": "2022-12-31", "y": 115053000000}, {"l": "2023", "x": "2023-12-31", "y": 171912000000}, {"l": "2024", "x": "2024-12-31", "y": 192434000000}, {"l": "2025", "x": "2025-12-31", "y": 188754000000}, {"l": "2026", "x": "2026-12-31", "y": 203316371100, "oy": 203316371100, "e": true, "d": 2026, "g": 7.72, "og": 7.72}, {"l": "2027", "x": "2027-12-31", "y": 219002229130, "oy": 219002229130, "e": true, "d": 2027, "g": 7.72, "og": 7.72}, {"l": "2028", "x": "2028-12-31", "y": 235898251107, "oy": 235898251107, "e": true, "d": 2028, "g": 7.72, "og": 7.72}, {"l": "2029", "x": "2029-12-31", "y": 254097801180, "oy": 254097801180, "e": true, "d": 2029, "g": 7.72, "og": 7.72}, {"l": "2030", "x": "2030-12-31", "y": 273701446541, "oy": 273701446541, "e": true, "d": 2030, "g": 7.72, "og": 7.72}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}, {"label": "Net Income", "mappingKey": "income:netIncome", "data": [{"l": "2016", "x": "2016-12-31", "y": 17822000000}, {"l": "2017", "x": "2017-12-31", "y": 18232000000}, {"l": "2018", "x": "2018-12-31", "y": 28147000000}, {"l": "2019", "x": "2019-12-31", "y": 27430000000}, {"l": "2020", "x": "2020-12-31", "y": 17894000000}, {"l": "2021", "x": "2021-12-31", "y": 31978000000}, {"l": "2022", "x": "2022-12-31", "y": 27528000000}, {"l": "2023", "x": "2023-12-31", "y": 26515000000}, {"l": "2024", "x": "2024-12-31", "y": 27132000000}, {"l": "2025", "x": "2025-12-31", "y": 30628000000}, {"l": "2026", "x": "2026-12-31", "y": 41822177535, "oy": 41822177535, "e": true, "d": 2026, "g": 36.55, "og": 36.55}, {"l": "2027", "x": "2027-12-31", "y": 45048758532, "oy": 45048758532, "e": true, "d": 2027, "g": 7.72, "og": 7.72}, {"l": "2028", "x": "2028-12-31", "y": 48524270252, "oy": 48524270252, "e": true, "d": 2028, "g": 7.72, "og": 7.72}, {"l": "2029", "x": "2029-12-31", "y": 52267917702, "oy": 52267917702, "e": true, "d": 2029, "g": 7.72, "og": 7.72}, {"l": "2030", "x": "2030-12-31", "y": 56300387553, "oy": 56300387553, "e": true, "d": 2030, "g": 7.72, "og": 7.72}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}], "editableDates": {"2026-12-31": 35, "2027-12-31": 36, "2028-12-31": 37, "2029-12-31": 38, "2030-12-31": 39}, "properties": {"display_table": true}, "width": "full"}

Edit Chart Values	2026-12-31	2027-12-31	2028-12-31	2029-12-31	2030-12-31

↳ Growth Rate

Estimated Future Values

Monetary values in USD amounts except #	2025 Dec 31	LTM Mar 01	2026 Dec 31	2027 Dec 31	2028 Dec 31	2029 Dec 31	2030 Dec 31
Revenue	188,754	188,754	203,316	219,002	235,898	254,098	273,701
Revenue Growth Rate	-1.91%	0%	7.71%	7.71%	7.71%	7.71%	7.71%
Net Income	30,628	30,628	41,822	45,049	48,524	52,268	56,300

Monetary values in USD

amounts except #

2025
Dec 31

LTM
Mar 01

2026
Dec 31

2027
Dec 31

2028
Dec 31

2029
Dec 31

2030
Dec 31

Revenue

188,754

203,316

219,002

235,898

254,098

273,701

Revenue Growth Rate

-1.91%

7.71%

Net Income

30,628

41,822

45,049

48,524

52,268

56,300

Historical Values

Monetary values in USD amounts except #	Average	LTM Mar 01	2025 Dec 31	2024 Dec 31	2023 Dec 31	2022 Dec 31	2021 Dec 31	2020 Dec 31	2019 Dec 31	2018 Dec 31	2017 Dec 31	2016 Dec 31
Revenue	132,805	188,754	188,754	192,434	171,912	115,053	93,851	93,753	113,589	109,627	99,466	93,662
Cost of Revenue	41,985	84,145	84,145	96,368	77,725	22,646	144	19,545	25,935	21,889	15,736	13,558
Gross Profit	90,820	104,609	104,609	96,066	94,187	92,407	93,707	74,208	87,654	87,738	83,730	80,104
Gross Margin	72.89%	55.42%	55.42%	49.92%	54.79%	80.32%	99.85%	79.15%	77.17%	80.03%	84.18%	85.52%
Operating Income	30,261	34,882	34,882	29,254	28,342	30,969	33,976	18,995	32,754	34,584	29,213	25,021
Operating Margin	24.41%	18.48%	18.48%	15.2%	16.49%	26.92%	36.2%	20.26%	28.84%	31.55%	29.37%	26.71%
Net Income	25,812	30,628	30,628	27,132	26,515	27,528	31,978	17,894	27,430	28,147	18,232	17,822
Net Margin	20.57%	16.23%	16.23%	14.1%	15.42%	23.93%	34.07%	19.09%	24.15%	25.68%	18.33%	19.03%

Historical Growth Rates

Monetary values in USD amounts except #	Average	LTM Mar 01	2025 Dec 31	2024 Dec 31	2023 Dec 31	2022 Dec 31	2021 Dec 31	2020 Dec 31	2019 Dec 31	2018 Dec 31	2017 Dec 31	2016 Dec 31
Revenue	132,805	188,754	188,754	192,434	171,912	115,053	93,851	93,753	113,589	109,627	99,466	93,662
Revenue Growth Rate	7.72%	0%	-1.91%	11.94%	49.42%	22.59%	0.105%	-17.46%	3.61%	10.22%	6.2%	0.158%
Net Income	25,812	30,628	30,628	27,132	26,515	27,528	31,978	17,894	27,430	28,147	18,232	17,822
Net Margin	20.57%	16.23%	16.23%	14.1%	15.42%	23.93%	34.07%	19.09%	24.15%	25.68%	18.33%	19.03%
Net Income Growth Rate	9.79%	0%	12.89%	2.33%	-3.68%	-13.92%	78.71%	-34.76%	-2.55%	54.38%	2.3%	12.02%
Stockholders Equity	279,396	303,243	303,243	295,559	291,646	273,197	270,066	272,924	264,810	265,325	267,146	266,195
Equity Growth Rate	1.57%	0%	2.6%	1.34%	6.75%	1.16%	-1.05%	3.06%	-0.194%	-0.682%	0.357%	3.91%
Return on Invested Capital (ROIC)	6.92%	4.95%	4.95%	5.1%	5.27%	7.69%	13.67%	9.12%	7.31%	8.09%	5.06%	4.88%
After-tax Operating Income	25,812	30,628	30,628	27,132	26,515	27,528	31,978	17,894	27,430	28,147	18,232	17,822
Income Tax Rate	14.74%	12.2%	12.2%	7.25%	6.45%	11.11%	5.88%	5.8%	16.25%	18.61%	37.59%	28.77%
Invested Capital	409,957	618,944	618,944	531,874	503,390	358,073	233,949	196,253	375,228	347,710	360,261	364,899