What to Expect From Wells Fargo Earnings

Wells Fargo is the largest bank in the United States by market cap at $281 billion. The EPS estimate is lower than the $1.05 the bank earned in the first quarter of 2014. Wells Fargo’s forward price-to-earnings (P/E) estimate is around 12 and the price-to-book ratio is 1.68.

Goldman Sachs sees Wells Fargo rather insulated from the low-rate environment. Maybe having all that mortgage business is better than the risks it could bring after all.

Warren Buffett’s bank is now top dog in the banking sector because it has limited exposure to the financial trading caps and limitations that the other money center banks face. Wells Fargo is deemed to be the healthiest, or least problematic, of the major banks by regulators as well.

Wells Fargo was forced to face a financial storm in 2009 when it cut its dividend to $0.05 from $0.34. Similar to J.P. Morgan, Wells Fargo waited until 2011 to raise its dividend to $0.12, followed by a jump to $0.22 in 2012. After that, the dividend was increased in 2013 to $0.30 and then to its current level of $0.35 in 2014.

Back in March, Wells Fargo announced that the Fed Board had not objected to its proposed 2015 Capital Plan. In this plan Wells Fargo proposed a dividend rate of $0.375 per share beginning in the second quarter of 2015, effectively a 7% increase over the current rate. The CEO, John Stumpf, said in a statement that the bank will continue with its strong share repurchase activity. That would be annualized rate of $1.50, which is a payout ratio of about 36% of the $4.16 in earnings per share expected for 2015.

24/7 Wall St. has included some recent analyst calls on Wells Fargo that have been made ahead of earnings:

• J.P. Morgan reiterated a Hold rating and raised its price target slightly to $53.50
• Zacks reiterated a Hold rating with a price target of $58
• Deutsche Bank reiterated a Hold rating with a price target of $56

Shares of Wells Fargo were up 0.6% at $54.64. The stock has a consensus analyst price target of $57.19 on a 52-week trading range of $46.44 to $56.29.

ALSO READ: The Happiest (and Most Miserable) Cities in America