How To Trade Bank of America Stock Ahead of Earnings?

Forbes

08-07-2025

MANHATTAN, NEW YORK, UNITED STATES - 2025/06/02: Sign at the entrance to a Bank of America branch in ... More Midtown Manhattan. (Photo by Erik McGregor/LightRocket via Getty Images) LightRocket via Getty Images
Bank of America (NYSE:BAC) is anticipated to announce its earnings on Wednesday, July 16, 2025. Consensus predictions indicate revenues of approximately $26.77 billion for the quarter, reflecting a 5.5% increase year-over-year, while earnings are expected to be around $0.87 per share, rising from $0.83 in the same period last year. The company may experience a boost in its net interest income (NII) — the difference between interest accrued on loans and interest paid on deposits — due to reduced deposit costs and assets yielding higher returns. Nevertheless, the investment banking sector could negatively impact overall performance, with the bank suggesting that revenue from this segment may decline by as much as 25% in Q2, as deal activity likely slowed owing to policy uncertainties surrounding tariffs.
Bank of America has a current market capitalization of $374 billion. Revenue over the past twelve months was $103 billion, and it reported an operational loss with a net income of $28 billion. However, if you are looking for upside potential with lower volatility compared to individual stocks, the Trefis High Quality portfolio serves as an alternative — having outperformed the S&P 500 and achieved returns exceeding 91% since its inception.
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Bank of America's Historical Odds Of Positive Post-Earnings Return
Here are some observations regarding one-day (1D) post-earnings returns: There are 20 recorded earnings data points from the last five years, with 12 positive and 8 negative one-day (1D) returns noted. In summary, positive 1D returns occurred about 60% of the time.
and one-day (1D) returns noted. In summary, positive 1D returns occurred about 60% of the time. Notably, this percentage rises to 75% when examining data from the last 3 years instead of the last 5.
The median of the 12 positive returns is 2.9%, while the median of the 8 negative returns is -2.6%
Additional data for observed 5-Day (5D) and 21-Day (21D) returns following earnings are summarized alongside the statistics in the table below.
BAC 1D, 5D, and 21D Post Earnings Return Trefis
A comparatively less risky strategy (even though it may not be applicable if the correlation is low) is to investigate the correlation between short-term and medium-term returns following earnings, identify the pair with the highest correlation, and execute the corresponding trade. For instance, if 1D and 5D exhibit the highest correlation, a trader can position themselves 'long' for the next 5 days if the 1D post-earnings return is favorable. Below is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the connection between 1D post-earnings returns and the subsequent 5D returns.
BAC Correlation Between 1D, 5D, and 21D Historical Returns Trefis
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