Wells Fargo (WFC) Outpaces Stock Market Gains: What You Should Know

On By Littum

Wells Fargo (WFC) ended the recent trading session at $71.59, reflecting a change of +1.49% from the previous trading day’s close. The stock outperformed the S&P 500, which registered a 1.1% gain for the day. At the same time, the Dow rose 0.91% and the technology-heavy Nasdaq rose 1.35%.

Shares of the largest U.S. mortgage lender have fallen 8.27% in the past month, lagging the financial sector’s 4.4% loss and the S&P 500’s 0.22% gain.

The investment community will closely monitor Wells Fargo’s performance in its upcoming earnings report. The company’s upcoming EPS is expected to be $1.33, which represents an increase of 3.1% compared to the same quarter last year. Meanwhile, our latest consensus estimate calls for revenue of $20.5 billion, up 0.1% from the prior quarter.

For the full year, Zacks Consensus Estimates forecast earnings of $5.28 per share and revenue of $82.61 billion, indicating year-over-year changes of -2.76% and +0.02%, respectively.

Investors should also note any recent revisions to analyst estimates for Wells Fargo. These recent revisions tend to reflect the evolution of short-term business trends. Therefore, positive changes in estimates mean analyst optimism regarding the company’s business and profitability.

Empirical research indicates that these revisions in estimates have a direct correlation with impending share price developments. 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 runs from #1 (Strong Buy) to #5 (Strong Sell), has an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25 % since 1988. The Zacks Consensus EPS Estimate has moved 0.29% higher in the past month. Currently, Wells Fargo has a Zacks Rank of #2 (Buy).

In terms of valuation, Wells Fargo is currently trading at a Forward P/E ratio of 13.37. This represents a discount to the industry average Forward P/E of 16.57.

One should further note that WFC currently has a PEG ratio of 1.45. The PEG ratio is similar to the frequently used P/E ratio, but this parameter also includes the company’s expected earnings growth trajectory. WFC’s industry had an average PEG ratio of 1.37 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 47, placing it in the top 19% of all 250+ industries.