Wells Fargo & Company
) is scheduled to report its first-quarter 2014 results before
the opening bell on Friday, Apr 11.
In the last quarter, it delivered a 2.04% positive earnings
surprise on the back of prudent expense management. This
represented the 16th straight quarter of positive earnings
surprise. Will Wells Fargo be able to keep the earnings streak
alive? Let's see how things have shaped up for this announcement.
Factors to Influence 1Q Results
We expect expense control and stable balance sheets to be the key
earnings drivers in the first quarter. Moreover, a favorable
equity and asset market backdrop, falling unemployment, a
progressive housing sector and a flexible monetary policy are
making the road to growth even smoother.
Yet, uncertainty related to top-line growth looms due to reduced
mortgage refinance volume and pressure on net interest margins
from the sustained low rate environment. Moreover, litigation
costs related to recent settlements might drive down
profitability in the first quarter.
Activities of Wells Fargo during the first quarter of the year
were adequate to win analysts' confidence. As a result, the Zacks
Consensus Estimate for the quarter increased 1.0% to 97 cents per
share over the last 7 days.
Our proven model does not conclusively show that Wells Fargo is
likely to beat the Zacks Consensus Estimate in the first quarter.
That is because a stock needs to have both a positive
and a Zacks Rank #1 (Strong Buy) or at least 2 or 3 for this to
happen. Unfortunately, this is not the case here as elaborated
The Earnings ESP for Wells Fargo is -3.09%. This is
because the Most Accurate estimate of 94 cents is below the Zacks
Consensus Estimate of 97 cents.
Wells Fargo's Zacks Rank #2 (Buy), however, increases the
predictive power of ESP. That said, we also need to have a
positive ESP to be confident of an earnings surprise call.
Other Stocks to Consider
Here are a couple of stocks you may want to consider, as our
model shows that these have the right combination of elements to
post an earnings beat this quarter:
The earnings ESP for
The PNC Financial Services Group, Inc.
) is +2.41% and it carries a Zacks Rank #3 (Hold). The company is
scheduled to release its first-quarter results on Apr 16.
) has an earnings ESP of +6.82% and carries a Zacks Rank #2
(Buy). It is expected to report its first-quarter results on Apr
Wells Fargo and
JPMorgan Chase & Co.
), with exposure in almost all banking businesses, are the first
among the banking big shots to report first-quarter earnings.
Therefore, the earnings releases of these banks are going to be a
significant indicator of the performance of the key banking
BANKUNITED INC (BKU): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
PNC FINL SVC CP (PNC): Free Stock Analysis
WELLS FARGO-NEW (WFC): Free Stock Analysis
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