Wells Fargo Soars as Revenue and Profits Swell

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Financials are looking spiffy this morning as banks begin to turn in superb second-quarter earnings. Heavy hitters JPMorgan Chase (NYSE: JPM  ) and Wells Fargo (NYSE: WFC  ) unveiled some sweet numbers earlier today, and Wells was up more than 2% in midday trading. Though the KBW Bank Index (DJINDICES: ^BKX  ) was in the red early this morning, it too has been buoyed by these excellent reports.

Earnings and revenue estimates easily beat
Wells sailed past analysts' estimates on earnings per share by $0.04, turning in a nifty $0.98 on that metric. Revenue of $21.38 beat by $0.17 billion, as well. To put those numbers in perspective, EPS increased 20% over the second quarter of 2012, with profits up 19%. Revenue was up by $89 million over last year's figures.

The somewhat flat revenue numbers are likely traceable to a slowdown in the mortgage market, particularly refinances. Despite this industrywide headwind, which was noted last quarter by both Wells and JPMorgan, Wells reported both higher mortgage originations and applications from the first quarter. The application pipeline isn't quite as robust at $63 billion, however, as it was at the end of March, when it clocked in at $74 billion.

Similarly, JPMorgan noted that its mortgage banking profit decreased by $179 million, to $1.1 billion, from the same time last year.

Wells trumped JPMorgan in the area of net interest income, a metric that has been compressed by the low-interest environment of the past few years. While JPMorgan noted that its own net interest income decreased by 1% year over year, Wells' increased by 9%  since the second quarter of 2012, because of loan growth and securities investments.

As Wells Fargo nears its 52-week high this morning, it looks like the sky will be the limit as investors celebrate the good news. Though mortgage rates have caused a drop in demand for such loans lately, Federal Reserve Chair Ben Bernanke's calming words on Wednesday, when he reiterated the Fed's commitment to economic stimulus for the foreseeable future, may have halted the escalation, and today's rates have edged down slightly from yesterday. For Wells Fargo, the future just got a little bit brighter.

Many investors are terrified about investing in big banking stocks after the crash, but the sector has one notable stand-out. In a sea of mismanaged and dangerous peers, it rises above as "The Only Big Bank Built to Last." You can uncover the top pick that Warren Buffett loves in The Motley Fool's new report. It's free, so click here to access it now.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

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.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2534703, ~/Articles/ArticleHandler.aspx, 9/26/2016 8:44:47 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,094.83 -166.62 -0.91%
S&P 500 2,146.10 -18.59 -0.86%
NASD 5,257.49 -48.26 -0.91%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/26/2016 4:00 PM
WFC $44.88 Down -0.86 -1.88%
Wells Fargo CAPS Rating: ****
JPM $65.78 Down -1.47 -2.19%
JPMorgan Chase CAPS Rating: ****