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Wells Fargo (WFC) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3 mins read

Wells Fargo (WFC) closed the most recent trading day at $23.82, moving +0.76% from the previous trading session. This change lagged the S&P 500's 1.61% gain on the day. At the same time, the Dow added 1.51%, and the tech-heavy Nasdaq gained 1.87%.

Prior to today's trading, shares of the biggest U.S. mortgage lender had lost 3.86% over the past month. This has was narrower than the Finance sector's loss of 5.22% and the S&P 500's loss of 4.08% in that time.

Wall Street will be looking for positivity from WFC as it approaches its next earnings report date. This is expected to be October 14, 2020. On that day, WFC is projected to report earnings of $0.38 per share, which would represent a year-over-year decline of 58.7%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $17.87 billion, down 18.8% from the year-ago period.

WFC's full-year Zacks Consensus Estimates are calling for earnings of $0.06 per share and revenue of $71.54 billion. These results would represent year-over-year changes of -98.63% and -15.89%, respectively.

Investors might also notice recent changes to analyst estimates for WFC. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 65.87% higher. WFC is currently a Zacks Rank #4 (Sell).

Valuation is also important, so investors should note that WFC has a Forward P/E ratio of 373.26 right now. For comparison, its industry has an average Forward P/E of 13.13, which means WFC is trading at a premium to the group.

We can also see that WFC currently has a PEG ratio of 38.46. 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 rate. The Banks - Major Regional was holding an average PEG ratio of 2.1 at yesterday's closing price.

The Banks - Major Regional industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 204, which puts it in the bottom 20% 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.

To follow WFC in the coming trading sessions, be sure to utilize Zacks.com.


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