Bank of America Corporation

AI-generated fair value estimate for this company.

Method: Excess-return (residual income) model on book value: $39.34 book value per share; 11.2% trailing ROE; 9.5% cost of equity (risk-free ~4.2% plus a bank-appropriate equity risk premium); 4% long-run nominal growth; justified P/B of (ROE-g)/(COE-g) = 1.31x applied to book value per share

Reasoning: For a diversified money-center bank, a residual-income/justified-P/B framework tied to ROE versus cost of equity is more appropriate than an unlevered FCF DCF, since bank 'free cash flow' is not economically meaningful and equity value is driven by the spread between returns on book equity and the cost of that equity