How Will Bank of America Stock React To Its Upcoming Earnings?

Bank of America (NYSE:BAC) is expected to report its earnings on  April 15, 2025. Consensus estimates point to about $26.9 billion in revenues, up 4% compared to last year, while earnings are estimated at about $0.82 per share. Earnings could be driven by slightly higher net interest income, although the performance of other segments could be a bit more mixed. Over Q4, the bank saw its investment banking business put up a strong showing, but this could be more muted in Q1, as increasing economic uncertainty and trade tensions are likely to have made companies reassess their appetite for dealmaking. The company has $277 Bil in current market capitalization. Revenue over the last twelve months was $102 billion, and net income stood at about $27 billion.

Investors will be closely watching what the bank has to say on the economic outlook. Things have been volatile in the U.S. markets over the past week after President Donald Trump announced a sweeping round of tariffs that would apply to over 100 countries and then paused the rollout on Thursday.  However, things look tough for the markets, as the trade war with China has only been escalating. This raises concerns about inflation making a comeback, with the economy likely to see a downturn. This could have a meaningful impact on the banking sector at large. While banks might have to put aside more reserves to cover losses on existing loans impacting profitability, they could also scale back on lending amid higher risks to the economy. Bank of America’s stock has declined by about 19% year-to-date. That said,  if you seek upside with lower volatility than individual stocks, the Trefis High-Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

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Bank of America’s Historical Odds Of Positive Post-Earnings Return

Some observations on one-day (1D) post-earnings returns:

• There are 20 earnings data points recorded over the last five years, with 11 positive and 9 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 55% of the time.
• Notably, this percentage increases to 75% if we consider data for the last 3 years instead of 5.
• Median of the 11 positive returns = 2.3%, and median of the 9 negative returns = -2.7%

Additional data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.

Correlation Between 1D, 5D, and 21D Historical Returns

A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 1D post-earnings return is positive. Here is some correlation data based on a 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.

Learn more about Trefis RV strategy that has outperformed its all-cap stocks benchmark (combination of all 3, the S&P 500, S&P mid-cap, and Russell 2000), to produce strong returns for investors. Separately, if you want upside with a smoother ride than an individual stock like Bank of America, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

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