Banking, finance, and taxes

What to Look for in Wells Fargo Earnings

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Wells Fargo & Co. (NYSE: WFC) is set to release its fourth-quarter earnings report before the markets open on Friday. Thomson Reuters has consensus estimates that call for $1.02 in earnings per share (EPS) on $21.80 billion in revenue. The same period from the previous year had $1.02 in EPS and $21.44 billion in revenue.

This large cap bank is another stock for investors to look at now for safety and dividends. Wells Fargo is a nationwide, diversified, community-based financial services company with $1.8 trillion in assets. It provides banking, insurance, investments, mortgage and consumer and commercial finance through 8,700 locations, 12,800 ATMs, the Internet and mobile banking, and it has offices in 36 countries to support customers who conduct business in the global economy. Wells Fargo serves one in three households in the United States.

Wells Fargo slowly but surely has become one of the biggest mortgage lending companies in the United States, in addition to its normal banking and brokerage businesses. A continued increase in commercial real estate lending could really boost the bank’s bottom line. The analysts feel that could aid a big return in capital to shareholders. The stock also remains a top Warren Buffett holding.

Analysts like the stability, yield and some asset sensitivity that the big bank offers, and investors looking to add financials to their portfolio could do well buying shares, knowing that the bank has little exposure outside of the United States. The analysts do note that 2016 could be a transitional year, with slow earnings growth, and expenses could run higher due to the GE acquisitions and tech and cyber upgrades.

A few analysts weighed in on Wells Fargo prior to the release of the earnings report:

  • Keefe, Bruyette & Woods upgraded it to Outperform from Market Perform and raised the price target to $60.
  • Goldman Sachs upgraded it to a Buy rating from Neutral with a price target of $60.
  • Citigroup upgraded it to Buy from Neutral and raised the price target to $60.
  • Deutsche Bank has a Buy rating.
  • Jefferies has a Buy rating with a $39 price target.

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So far in 2016, Wells Fargo has outperformed the broad markets and only dropped about 8.5% year to date. Over the past 52 weeks, the stock is down only 1.5%.

Shares of Wells Fargo were trading up about 2% Thursday to $50.70, with a consensus analyst price target of $58.59 and a 52-week trading range of $47.75 to $58.77.

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