Here’s why Wells Fargo (WFC) fell more than the broader market

On By Littum

Wells Fargo (WFC) closed the last trading day at $70.81, indicating a change of -1.63% from the previous session’s close. The stock fell below the S&P 500, which registered a loss of 0.39% for the day. On the other hand, the Dow registered a loss of 0.61% and the tech-centric Nasdaq fell 0.32%.

Shares of the largest U.S. mortgage lender saw a 2.85% loss from the previous month, lagging the financials sector’s performance of 0.19% and the S&P 500’s gain of 3.6%.

The investment community will be paying close attention to Wells Fargo’s earnings in its upcoming release. The company is expected to post EPS of $1.33, indicating growth of 3.1% compared to the same quarter last year. Meanwhile, the Zacks Consensus Estimate for revenue calls for net sales of $20.5 billion, up 0.1% year-over-year.

Looking at the full year, Zacks Consensus Estimates suggest analysts expect earnings of $5.27 per share. share and revenue of $82.61 billion. These totals would mark changes of -2.95% and +0.02% respectively from last year.

Investors should also note any recent revisions to analyst estimates for Wells Fargo. These recent adjustments often reflect the changing dynamics of short-term business patterns. As a result, upward revisions to estimates express analysts’ positivity toward the company’s business operations and its ability to generate profits.

Research indicates that these estimate revisions are directly correlated with short-term stock price momentum. To capitalize on this, we have formed Zacks Rank, a quantitative model that incorporates these estimate changes and presents a viable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive, externally audited track record of outperformance, with #1 stocks generating average annual returns of +25% since 1988. Over the past month, the Zacks Consensus EPS Estimate has moved 0.13% higher. Wells Fargo currently has a Zacks Rank of #2 (Buy).

In terms of valuation, Wells Fargo currently trades at a Forward P/E ratio of 13.66. This indicates a discount to its industry’s Forward P/E of 17.23.

It’s also worth noting that WFC currently has a PEG ratio of 1.55. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth. WFC’s industry had an average PEG ratio of 1.48 at yesterday’s close.

The finance and investment banking industry is part of the financial sector. This industry currently has a Zacks Industry Rank of 49, placing it in the top 20% of all 250+ industries.