Wells Fargo & Co. Earnings Preview

Wells Fargo & Co. (NYSE: WFC  ) beat estimates by $0.01 last quarter and investors are hoping it can beat them again. The company will unveil its latest earnings on Monday. Wells Fargo provides financial services in mainly wholesale banking, mortgage banking, consumer finance, equipment leasing, agricultural finance, and commercial finance.

What analysts say:
 

  • Buy, sell, or hold?: Analysts are bullish on this stock with 18 analysts rating it as a buy and only one rating it as a sell. Analysts don't like Wells Fargo & Co. as much as competitor JPMorgan Chase overall. Analysts still rate the stock a moderate buy, but they are a bit more wary about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $20.22 billion in revenue this quarter. That would represent a decline of 3.1% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.73 per share. Estimates range from $0.66 to $0.80.

What our community says:
CAPS All-Stars are solidly behind the stock with 89.7% assigning it an outperform rating. The community at large backs the All Stars with 89.3% awarding it a rating of outperform. Fools are keen on Wells Fargo & Co. and haven't been shy with their opinions lately, logging 1,584 posts in the past 30 days. Despite the majority sentiment in favor of Wells Fargo & Co., the stock has a middling CAPS rating of three out of five stars.

Management:
Wells Fargo & Co.'s profit has risen year over year by an average of 25.2% over the past five quarters. Revenue has fallen for the past three quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Net Margin

17.9%

17.0%

14.6%

14.6%

One final thing: If you want to keep tabs on Wells Fargo & Co. movements, and for more analysis on the company, make sure you add it to your watchlist.

The Motley Fool owns shares of Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 14, 2011, at 9:28 AM, prospectTheory wrote:

    To the author, the bank industry uses the efficiency ratio not margins as shown in this article.

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