Signal Ledger LabSignal Ledger valuation · BAC
Bank of America Corp
What the shares are worth today on our research (management’s own targets for each business): every line valued at the end of FY2030, net debt rolled forward, then discounted back to Sep 30, 2026.
- Business value at FY2030
- $423B
- FY2030 net income
- $36B
- FY2030 EPS · P/E
- $5.13 · 12×
- Discount rate (WACC · equity)
- 9.57% · 9.57%
Latest quarter in this research: Q3 2026
Reported Oct 14, 2026 for the quarter to Sep 30, 2026 (company release ↗). This valuation already reflects these results (researched Oct 23, 2026).
| Segment | Revenue | vs a year ago | Operating income | Margin |
|---|---|---|---|---|
| Consumer Banking | $11.6B | +4% | — | — |
| Global Wealth and Investment Management | $7.12B | +13% | — | — |
| Global Banking | $6.21B | — | — | — |
| Global Markets | $5.87B | — | — | — |
| All Other | −$0.64B | — | — | — |
- Reported pretax income after funding costs/provisions was $8.967B; operatingIncomeB is null because bank pretax income is not industrial EBIT. Source: https://investor.bankofamerica.com/regulatory-and-other-filings/select-sec-filings/content/0000070858-26-000481/bac-09302026ex993.htm
- Revenue is GAAP net of interest expense; segment revenue is FTE and sums to 30.119B before the 0.161B FTE reconciliation.
- GAAP net income 6.933B includes a 1.2B regulatory settlement charge; adjusted EPS 1.08 differs from reported diluted EPS 0.91.
What each business is worth
| Business | Model | FY2030 revenue | Value today | Per share | 2030 multiple | Value from beyond FY2030 |
|---|---|---|---|---|---|---|
| Bank of America (firm-wide)Banking | Return on equity (residual income) | — | $389B | $56.15 | 2.0× P/B | 27% |
| All businesses | — | $389B | $56.15 |
From 2030 back to today
- Enterprise value at end of FY2030$423B
- Less net debt at FY2030$0B
- Equity value at FY2030$423B
- ÷ (1 + 9.57%)^4.3 years at the cost of equity$287B
- + dividends paid on the way, discounted$102B
This reconciliation checks the published Signal Ledger valuation against the net-debt path. The difference is 0.0%, inside our 5% tolerance.
From businesses to one share
- All businesses, valued today$389B
- − borrowings$0B
- − finance leases$0B
- + cash and short-term investments$0B
- ÷ diluted shares6.923B
- Signal Ledger valuation$56.15
Valued on common equity: a financial company's deposits, borrowings, cash and preferred stock are part of the balance sheet it earns its return on, so they are not deducted again.
Year by year to FY2030
| Fiscal year | Revenue | EBITDA | Capex | Free cash flow | Net debt at year end |
|---|---|---|---|---|---|
| FY2026 | $0B | $36B | $0B | $29B | $0B |
| FY2027 | $0B | $38B | $0B | $31B | $0B |
| FY2028 | $0B | $41B | $0B | $29B | $0B |
| FY2029 | $0B | $44B | $0B | $31B | $0B |
| FY2030 | $0B | $45B | $0B | $31B | $0B |
What must be true
- The company spends $0.0B of capital expenditure through FY2030.
- The company stays net cash throughout (lowest point $0.0B of net cash in FY2025).
- Bank of America (firm-wide) moves its return on equity from 14.2% to 17.0% by FY2030, against a 9.57% cost of equity.
What the price implies
Joint sales and margin requirements do not apply to this financial model.
At the research price of $51.08 (2026-10-23), the price asks less than our assumptions overall. These are operating requirements at that price, not additional valuations or forecasts.
- Implied discount rate
- 10.3%
- All-business FY2030 sales factor
- —
The WACC that makes model value equal the price, shifting WACC and cost of equity by the same amount. Model: 9.6% WACC · 9.6% cost of equity.
This model has no margin or capacity revenue paths to scale. FY1 stays fixed; the sales change ramps to FY2030 and stays at that factor thereafter.
Single-business sales and margin comparisons do not apply to asset, financial, project or REIT valuation lines.
Mechanical requirements, not forecasts. The separate sales-only and single-business factors are searched from 0.1× to 6×; an unsolved comparison means this business alone cannot get there within those bounds. Single-business revenue changes apply from FY2 onward; margin changes scale the full EBIT or EBITDA margin path. Mixed groups show revenue-weighted EBIT and EBITDA margins separately. Requirements above 100% are not feasible margins. Joint rows instead search non-negative uniform margin factors only up to the EBIT/EBITDA guardrails; the entire margin path scales, including post-FY2030 convergence. Sales and margins change together only in that table. The rate search runs from the largest terminal growth rate plus 0.5 percentage points to 30% WACC.
The discount rate
- Cost of equity
- 9.57%
- WACC
- 9.57%
- 10-year Treasury · model / spot
- 3.87% · 5.13%
r_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 1.14 after Blume adjustment × 5%, rounded to 0.01% (1bp)
methodology §4.5: market-weighted WACC, not rounded
The model uses the recorded 5-year average Treasury yield. The spot yield is shown for context.
Every input, with its source
Show 17 inputs · reported, guidance and rule-based
| Input | Value | Basis | Why |
|---|---|---|---|
| Common equityBank of America (firm-wide) | $201.8B | Reported | Exhibit A: total equity 296.749B - preferred 24.996B =common 271.753B; -goodwill 69.021B -intangibles excluding MSR 1.784B +related deferred tax liabilities 0.812B =ending TCE 201.760B; matches ROTCE. investor.bankofamerica.com ↗ |
| Return on equity FY2026Bank of America (firm-wide) | 14.2% | Reported | Full-year 2025 reported return on average tangible common shareholders' equity 14.22%; matches the tangible book base and excludes preferred distributions. sec.gov ↗ |
| Return on equity FY2030Bank of America (firm-wide) | 17.0% | Guidance | straight line to the 17.0% FY2029 target, then held (methodology §4.6) d1io3yog0oux5.cloudfront.net ↗ |
| Payout through FY2027Bank of America (firm-wide) | 101.5% | Reported | FY2025 common dividends approximately 8.1B plus common repurchases 21.4B = approximately 29.5B divided by net income applicable to common 29.055B = approximately 101.53%. Preserve the actual over-100% payout instead of inventing a 100% cap or using income that belongs to preferred holders Retained above 100% with finite capital budget, no clipping or denominator change. sec.gov ↗ · newsroom.bankofamerica.com ↗ |
| Last excess-distribution yearBank of America (firm-wide) | FY2027 | Rule | Preserve existing analyst-selected end FY2027; refreshed September T0 leaves Q4 FY2026 plus FY2027 (1.25 forward years). Not promised repurchases. investor.bankofamerica.com ↗ |
| Sustainable payout thereafterBank of America (firm-wide) | 88.2% | Rule | Preserve existing sustainable payout 88.2352941176% from FY2028: retain 2% equity growth capital at target 17.0% return, payout=1-2%/target. Research assumption, not management capital-return guidance. investor.bankofamerica.com ↗ |
| Excess-capital budgetBank of America (firm-wide) | $1.0B | Rule | Preserve existing 1B deployable budget. September CET1 198.407B minus management target 10.5% times 1823.896B standardized RWA =6.89792B headroom; retain 5.89792B buffer. Target is regulatory minimum 10% +50bp management buffer (2025 Investor Day slide 21: https://d1io3yog0oux5.cloudfront.net/_deba4b0fb17dcf0d113c2ab6060b3d50/bankofamerica/db/968/10447/file_upload/BofAInvestorDay_FullPresentation_Final.pdf). No future regulatory relief/RWA/stress forecast; bank/subsidiary and leverage constraints also apply. investor.bankofamerica.com ↗ |
| Protected equity floorBank of America (firm-wide) | $200.8B | Rule | Preserve existing 1B deployable capital budget and protect latest same-basis opening equity 201.760B less 1B = 200.760B. Updating the same formula, no new capital-allocation judgment. CET1 is not book equity. investor.bankofamerica.com ↗ |
| Terminal growthBank of America (firm-wide) | 2.0% | Rule | methodology §4.2 terminal growth for a mature line Valuation methodology §4.2 · Read methodology ↗ |
| WACCDiscount rates | 9.57% | Rule | methodology §4.5: market-weighted WACC, not rounded FRED DGS10 2021-10-20..2026-10-21 |
| Cost of equityDiscount rates | 9.57% | Rule | r_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 1.14 after Blume adjustment × 5%, rounded to 0.01% (1bp) 60 monthly returns vs SPY, 2021-09..2026-09 (adjusted closes) |
| Tax rateDiscount rates | 20.5% | Reported | Latest nine-month GAAP income tax expense divided by pretax income, 6.345/30.936; no firm FY2026 effective-rate guidance located. This display rate does not alter after-tax ROTCE earnings. investor.bankofamerica.com ↗ |
| Cash and short-term investmentsBalance sheet | $0.0B | Reported | cash: inside the common equity the financial line is valued on (methodology §3.7) balance sheet 2026-06-30 |
| BorrowingsBalance sheet | $0.0B | Reported | borrowings and deposits: inside the common equity the financial line is valued on (methodology §3.7) balance sheet 2026-06-30 |
| Finance leasesBalance sheet | $0.0B | Reported | finance leases: inside the common equity the financial line is valued on (methodology §3.7) balance sheet 2026-06-30 |
| SharesBalance sheet | 6.923B | Reported | shares outstanding as of 2026-09-30 investor.bankofamerica.com ↗ |
| Dividends per yearShareholders | $0.0B | Rule | Financial plugin distributes through payoutRatio including common dividends and repurchases; zero here prevents a duplicate dividend add-on, and is not a statement of zero paid dividends.: paid out of the financial line's earnings at its payout ratio (methodology §3.7) sec.gov ↗ |
Research notes
- balance sheet and shares at 2026-09-30 from the research (newer than the XBRL 2026-06-30); replaced automatically once the filing is in XBRL
- share-count comparison: 7.2942B quarter 2026-04-01..2026-06-30 · 0000070858-26-000394; point-in-time denominator retained
- valued on common equity (financial lines): cash, borrowings, deposits and preferred are inside it, not deducted again; dividends come from the payout ratio
- cost of equity 9.57% (β 1.14 after Blume adjustment), WACC 9.6%
- Bank of America (firm-wide): residual income on $201.8B of common equity, earnings = ROE × equity, payout 102% (methodology §3.7)
Signal Ledger research under one stated scenario — management's targets are delivered — not a forecast that they will be and not investment advice. The research desk (GPT-6.1 (Codex)) gathers filings, guidance and targets; deterministic code applies the samepublished rules to every company and checks the result. Inputs may contain errors; follow the source links before relying on them. Read our valuation methodology →