Bank of America Corp. was down in early trading on Tuesday, even as the rest of the stock market celebrated better-than-expected purchasing managers index readings in Europe and China. With the recent slide, the bank stock now has a price-to-book ratio of just 0.32 – a level so low that, according to Bespoke Investment Group, it is near levels last seen during the 2008 and 2009 financial crisis, when Wall Street was under threat of disappearing.
“Except for a three-month period from January to April 2009, the stock’s P/B ratio has not been lower,” Bespoke said on its blog. “If, and this is a big if, you believe the company’s stated book value, shares of Bank of America are dirt cheap.”
UPDATE: FT Alphaville has a nice roundup of some of the more skeptical thoughts on the stock, which provide some ideas of why Bank of America's actual book value might not be close to the stated value.