Buffett Brain · Research note
Score updated 22 Oct 2026 · analysis from 1 Jun 2026
BAC· Financial Services
Bank of America
Bank of America looks cheap at 11.6 times earnings, but a 4.6 percent return on capital tells you the business is mediocre.
Buffett fit
Weak fit
Owner
43
Durability
80
Management
36
Price
63
Score updated 22 Oct 2026 · analysis from 1 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Financial Services stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned all of Bank of America, I would be unhappy that my capital earns a 4.6 percent while carrying the risks of a balance sheet levered 1.28 to one.
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Banking itself will be around in fifty years, and the durability score of 80 reflects that Bank of America is not going anywhere.
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The management score of 36 is the weak spot, and the numbers explain why.
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Here the picture is mixed and I want to be honest about it. At 11.6 times earnings the stock is not expensive, and an 8.6 percent earnings yield sounds attractive.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
6- 1Trades at just 11.6 times trailing earnings, a low multiple that already prices in plenty of pessimism.
- 2Durability score of 80 reflects a deeply entrenched franchise that is unlikely to disappear.
- 3Management has reduced the share count by 3.5 percent a year, returning capital to owners.
- 4 of 22.9 percent shows the core spread-and-fee business is profitable.
Concerns
7- 1 is only 4.6 percent on a trailing basis and 3.6 percent over five years, far below what a great business earns.
- 2Financial health scores just 12, with interest coverage of 0.52 and net-debt-to-EBITDA of 3.38 signaling a heavily leveraged balance sheet.
- 3 is only 41 percent of net income, so reported profits are not fully backed by cash.
- 4Earnings per share grew under 2 percent a year despite , showing the business barely advances.
Price history
$50.78+6.7%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Bank of America earns money the way every large bank does, by borrowing cheaply from depositors and lending at higher rates, then collecting fees on cards, advice, and trading. The of 22.9 percent looks healthy on the surface, but the of just 4.6 percent shows that all that scale converts into very little real profit per dollar tied up. Reported revenue grew 19.5 percent, yet earnings per share crawled ahead at only 1.9 percent a year, so the growth is not reaching the owner.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 22, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Financial Services
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