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Wells Fargo (WFC) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

Wells Fargo (WFC) closed at $47.92 in the latest trading session, marking a -1.83% move from the prior day. This move lagged the S&P 500's daily loss of 1.56%. Elsewhere, the Dow lost 1.19%, while the tech-heavy Nasdaq lost 1.67%.

Prior to today's trading, shares of the biggest U.S. mortgage lender had gained 0.83% over the past month. This has outpaced the Finance sector's gain of 0.16% and the S&P 500's loss of 1.22% in that time.

WFC will be looking to display strength as it nears its next earnings release, which is expected to be October 15, 2019. In that report, analysts expect WFC to post earnings of $1.19 per share. This would mark year-over-year growth of 5.31%. Meanwhile, our latest consensus estimate is calling for revenue of $20.84 billion, down 5% from the prior-year quarter.

WFC's full-year Zacks Consensus Estimates are calling for earnings of $4.77 per share and revenue of $83.57 billion. These results would represent year-over-year changes of +11.45% and -3.29%, respectively.

Any recent changes to analyst estimates for WFC should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.44% lower. WFC currently has a Zacks Rank of #3 (Hold).

In terms of valuation, WFC is currently trading at a Forward P/E ratio of 10.22. This valuation marks a discount compared to its industry's average Forward P/E of 10.93.

Meanwhile, WFC's PEG ratio is currently 0.95. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Banks - Major Regional stocks are, on average, holding a PEG ratio of 1.35 based on yesterday's closing prices.

The Banks - Major Regional industry is part of the Finance sector. This group has a Zacks Industry Rank of 194, putting it in the bottom 24% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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