Markets

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

In the latest trading session, Wells Fargo (WFC) closed at $24.69, marking a +0.41% move from the previous day. The stock lagged the S&P 500's daily gain of 0.67%. At the same time, the Dow added 0.57%, and the tech-heavy Nasdaq gained 0.61%.

Prior to today's trading, shares of the biggest U.S. mortgage lender had lost 0.24% over the past month. This has lagged the Finance sector's gain of 4.65% and the S&P 500's gain of 7.78% in that time.

WFC will be looking to display strength as it nears its next earnings release. In that report, analysts expect WFC to post earnings of $0.36 per share. This would mark a year-over-year decline of 60.87%. Our most recent consensus estimate is calling for quarterly revenue of $17.85 billion, down 18.92% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.04 per share and revenue of $71.58 billion. These totals would mark changes of -99.09% and -15.86%, respectively, from last year.

Any recent changes to analyst estimates for WFC should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 44.74% lower within the past month. 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 644.02 right now. Its industry sports an average Forward P/E of 14.58, so we one might conclude that WFC is trading at a premium comparatively.

Investors should also note that WFC has a PEG ratio of 66.36 right now. 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 2.29 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 215, putting it in the bottom 16% 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.

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


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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