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Tickers in this Article: BAC
Bank of America (NYSE:BAC) will release its third quarter earnings on Wednesday, October 17, 2012. Analysts have become increasingly bearish on the company over the last month, with the consensus analyst estimate slipping from 13 cents a share to the current prediction of earnings of 0 cents a share.

Investors should care about a company's quarterly earnings because it shows the state of the business over the past 90 days and provides guidance for the following 90 days. SEE: 5 Tricks Companies Use During Earnings Season

What to Expect: This is a drop from the consensus estimate three months ago of 14 cents. For the fiscal year, analysts are projecting earnings of 41 cents per share.

Bank of America's expected revenue of $21.95 billion for the quarter is below last year's reported figure of $33.9 billion by 35.3%. Bank of America is expected to report revenue of $90.4 billion for the fiscal year.

Company Performance: Revenue has risen by an average 7.4% in the last four quarters. The most significant increase took place in the most recent quarter, when it rose 38.4% from the year-earlier quarter.

Relative to the industry P/E ratio of 11.9, BAC's 9.8 is low. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: The P/E Ratio: A Good Market-Timing Indicator

The stock price has risen from $7.81 on July 16, 2012 to $9.34 over the past quarter. Bank of America's stock price is currently in the middle of a rising streak. The stock has risen 53 cents per share since September 26, 2012.

The Competition: Bank of America is a bank holding and a financial holding company which, through its subsidiaries, provides banking and other financial services and products to customers in the United States and abroad. Analysts generally consider Bank of America a hold, with 15 of 25 analysts rating it as such. Opinion about the stock has worsened recently, as buy ratings have dropped slightly over the last three months.

The company's closest competitor in the money center banks industry is JPMorgan (JPM). Analysts are less optimistic about Bank of America than about JPMorgan. Eighteen out of 26 analysts rate the latter a buy compared to eight of 25 for the former.

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