A moat score of 49 and a management score of 62 describe a business that is substantial without being dominant on the measures this framework uses. Return on invested capital of 4.2% and debt to equity of 2.60x are not signs of weakness here so much as signs of what a bank is: leverage is the business model, and returns on total capital read low because the capital base includes the deposits being lent. Gross margin of 59.9% is the more meaningful profitability figure.
Only the earnings-based anchors are available. The model uses 15.0% growth, deliberately capped below the 17.0% measured from history, against a 16.0x exit multiple, producing an intrinsic value of $372.26 and a margin of safety price of $186.13 — which stands as the consensus buy price in the absence of the cash-flow measures. At $349.67 the stock trades a little below intrinsic value and well above the margin of safety price.
The margin of safety score of 53 reflects that gap. The price is not demanding by the standards of the earnings model, but the discount that would constitute a genuine margin of safety is not there either, and the moat score offers less reassurance than it did when the measurement window included stronger years.
The 10-CAP and Payback Time prices are both built on owner earnings — cash from operations less maintenance capital expenditure. For a bank, cash from operations moves with the loan book, deposits and trading positions rather than with the profitability of the business, which is why the free cash flow yield reads −16.4% in a year the bank was profitable. Applying an owner-earnings model to that figure would produce a number, but not a meaningful one, so Moatly publishes neither. The earnings-based anchors above are unaffected.
| Price | $349.67 |
| Market cap | $936.9B |
| P/E ratio | 15.1x |
| Return on invested capital | 4.2% |
| Gross margin | 59.9% |
| Debt to equity | 2.60x |
| Free cash flow yield | -16.4% |
| Growth rate used | 15.0% |
| Growth rate measured | 17.0% |
| Exit multiple assumed | 16.0x |
| Company | Moat | Mgmt | Margin of safety |
|---|---|---|---|
| Bank of America (BAC) | 60 | 44 | 53 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of JPMorgan Chase & Co. rather than accepting ours.