Bank of America Corporation (BAC) Simple Excess Return Model - Discounting Cash Flows
BAC
Bank of America Corporation
BAC (NYSE)

Estimated Value

USD

Market Price USD

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

Simple Excess Return Model

Used to estimate the value of companies that have reached maturity and earn stable excess returns with little to no high growth chance. Excess Return models are better suited to calculate the intrinsic value of a financial company than an enterprise valuation model (such as the Discounted Free Cash Flow Model).

See our GitHub Documentation

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.

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↳ 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.

Return On Equity

Return on Equity

Return On Equity (ROE) is used to estimate the Earnings Per Share (EPS) expressed as a percentage of Book Value.

Growth In Perpetuity

Growth in Perpetuity

The rate at which the company's free cash flow is assumed to grow in perpetuity. By default, this is equal to the yield of the U.S. 10 Year Treasury Bond.

Historical Years

Historical Years

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

Results

Estimated Value 31.26 USD
Book value of equity invested 38.5 USD
Next year's estimated book value 39.86 USD
Present value of future excess returns -7.23 USD
Excess Return per share -0.409 USD
Cost of Equity (the discount rate) 10.01%
Average historical Return on Equity 8.94%
Average historical Payout Ratio 25.13%
Payout Ratio used 51.33%
Risk Free Rate of the 10 Year U.S. Treasury Note 4.35%

Historical and Forecasted Data

Monetary values are in USD

amounts of USD except for #

2024 LTM 2025 2026 2027 2028 2029
Beginning Book Value 36.33 38.19 38.19 39.86 41.59 43.4 45.29
Ending Book Value 38.19 38.5 39.86 41.59 43.4 45.29 47.26
EPS 3.25 3.39 3.41 3.56 3.72 3.88 4.05
Return on Equity 9.3% 9.42% 8.94% 8.94% 8.94% 8.94% 8.94%
Dividend per Share 1.0 1.04 1.75 1.83 1.91 1.99 2.08
Retained Earnings 2.25 2.35 1.66 1.73 1.81 1.89 1.97
Equity Cost per Share 3.64 3.82 3.82 3.99 4.16 4.34 4.53
Cost of Equity 10.01% 10.01% 10.01% 10.01% 10.01% 10.01% 10.01%
Excess Return -0.386 -0.433 -0.409 -0.427 -0.446 -0.465 -0.485

amounts of USD except for #

Average LTM 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Net Income 24,222 27,854 27,132 26,515 27,528 31,978 17,894 27,430 28,147 18,232 17,822 15,910
Total Equity 274,420 295,581 295,559 291,646 273,197 270,066 272,924 264,810 265,325 267,146 266,195 256,176
Return on Equity 8.94% 9.42% 9.3% 9.71% 10.19% 11.72% 6.76% 10.34% 10.54% 6.85% 6.96% 6.54%
Dividends Paid to Common Shareholders 5,755 7,985 7,738 7,386 6,978 6,625 6,302 6,198 5,452 3,976 2,571 2,092
Payout Ratio 25.13% 30.68% 30.77% 29.68% 26.79% 21.67% 38.3% 23.83% 20.45% 23.93% 15.82% 14.49%
Shares Outstanding 9,021 7,678 7,738 8,029 8,114 8,493 8,753 9,390 10,096 10,196 10,284 10,462
EPS 2.58 3.39 3.25 3.1 3.21 3.6 1.88 2.77 2.64 1.63 1.58 1.38
Dividend per Share 0.669 1.04 1.0 0.92 0.86 0.78 0.72 0.66 0.54 0.39 0.25 0.2
Book Value 30.97 38.5 38.19 36.33 33.67 31.8 31.18 28.2 26.28 26.2 25.88 24.49
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Discounting Cash Flows

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