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Wells Fargo (WFC) Gains As Market Dips: What You Should Know

Zacks Equity Research

Wells Fargo (WFC) closed at $53.82 in the latest trading session, marking a +0.02% move from the prior day. The stock outpaced the S&P 500's daily loss of 0.02%. Elsewhere, the Dow lost 0.13%, while the tech-heavy Nasdaq added 0.08%.

Coming into today, shares of the biggest U.S. mortgage lender had lost 0.74% in the past month. In that same time, the Finance sector gained 2.76%, while the S&P 500 gained 3.81%.

WFC will be looking to display strength as it nears its next earnings release, which is expected to be January 14, 2020. The company is expected to report EPS of $1.11, down 8.26% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $19.87 billion, down 5.27% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.52 per share and revenue of $83.88 billion. These totals would mark changes of +5.61% and -2.92%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for WFC. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. The Zacks Consensus EPS estimate has moved 0.39% higher within the past month. WFC is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, WFC is currently trading at a Forward P/E ratio of 11.9. For comparison, its industry has an average Forward P/E of 12.66, which means WFC is trading at a discount to the group.

We can also see that WFC currently has a PEG ratio of 1.11. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Banks - Major Regional industry currently had an average PEG ratio of 1.54 as of yesterday's close.

The Banks - Major Regional industry is part of the Finance sector. This group has a Zacks Industry Rank of 89, putting it in the top 35% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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