Bank of America vs Compass Which Is a Smarter Choice?

Bank of America and Compass stocks are two major players in the financial sector, each offering unique opportunities for investors. Bank of America, one of the largest banks in the United States, has a long history of stability and strong financial performance. On the other hand, Compass stocks represent a newer and more innovative approach to banking, with a focus on digital banking and customer-centric services. Both companies have their own strengths and weaknesses, making them intriguing options for investors looking to diversify their portfolios.

Bank of America or Compass?

When comparing Bank of America and Compass, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Bank of America and Compass.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Bank of America has a dividend yield of 2.19%, while Compass has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Bank of America reports a 5-year dividend growth of 11.24% year and a payout ratio of 40.07%. On the other hand, Compass reports a 5-year dividend growth of 0.00% year and a payout ratio of -14.93%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Bank of America P/E ratio at 15.12 and Compass's P/E ratio at -17.34. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Bank of America P/B ratio is 1.20 while Compass's P/B ratio is 8.00.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Bank of America has seen a 5-year revenue growth of 0.41%, while Compass's is 3.20%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Bank of America's ROE at 8.03% and Compass's ROE at -49.85%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $45.38 for Bank of America and $6.72 for Compass. Over the past year, Bank of America's prices ranged from $31.27 to $48.08, with a yearly change of 53.76%. Compass's prices fluctuated between $2.78 and $7.69, with a yearly change of 176.62%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.