On May 27, 2013, we reiterated our long-term recommendation on
Wells Fargo & Company
) at Neutral, based on its well-managed global franchise, strong
capital base and cost saving initiatives. However, regulatory
issues coupled with fundamental pressures on the banking sector
are expected to dent Wells Fargo's financials in the upcoming
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WELLS FARGO-NEW (WFC): Free Stock Analysis
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Wells Fargo achieved the thirteenth consecutive quarter of growth
in earnings per share by reporting earnings of 92 cents per share
in first-quarter 2013. Results improved from earnings per share
of 91 cents in the prior quarter and 75 cents in the year-ago
quarter. Also, it beat the Zacks Consensus Estimate by a nickel.
Results at Wells Fargo reflected growth in total loans and
deposits amid a challenging economy and prudent expense
management. Moreover, a strong capital position and returns on
assets and equity acted as the positives. It also reported $200
million in reserve release (pre-tax), attributable to improved
Moreover, following the Federal Reserve's approval for the
capital plan during the quarter, in Apr 2013, Wells Fargo
increased its quarterly common stock dividend by 20% to 30 cents
However, a fall in the top line acted as a headwind for the first
quarter. The quarter's total revenue came in at $21.3 billion,
lagging the Zacks Consensus Estimate of $21.4 billion. Revenues
also declined 2.7% sequentially and 1.4% year over year.
Though the U.S. economy posted stable to improving economic data
during the first quarter, including favorable developments in
unemployment and housing, concerns about the outlook on the
global economy and continued political uncertainty persist.
Following first-quarter 2013 results, the Zacks Consensus
Estimate for 2013 increased 2.2% to $3.68 per share as 14 out of
22 estimates were revised higher over the last 60 days. For 2014,
the Zacks Consensus Estimate remained stable at $3.88 per share.
Hence, Wells Fargo carries a Zacks Rank #3 (Hold).
Other Major Banks to Consider
Some banks that are worth considering include
Fifth Third Bancorp
JPMorgan Chase & Co.
) with a Zacks Rank #2 (Buy), while
Bank of America Corporation
) carries a Zacks Rank #3.