North Carolina-based banking giant Wachovia
Word on the street:
- Twenty analysts expect earnings to grow to $1.16 per share, up 3.6% from last year's first quarter. The highest estimate is $1.23, and the lowest projection is $1.12.
- The Motley Fool CAPS community has awarded Wachovia a three-star rating.
By the numbers:
The net interest margin -- a key banking metric -- has trended down over the past three years, as it has for most banks, because of the shrinking spread between the rates banks pay for deposits and the percentages they earn on loans. The spread had recently gone negative -- also known as the dreaded inverted yield curve. Analysts expect Wachovia's net interest margin to trend slightly below where it ended 2006: right around 3.06%
WB |
Dec. '03 |
Dec. '04 |
Dec. '05 |
Dec. '06 |
---|---|---|---|---|
Net Interest Margin |
3.72 |
3.41 |
3.24 |
3.12 |
Return on Equity |
13.17 |
13.08 |
13.55 |
13.21 |
One Fool says:
Wachovia and archrival Bank of America
However, growth by acquisition is more risky, and it can run out of steam when a company becomes too big. Citigroup's
Wall Street is still trying to determine whether subprime and related mortgage woes will hurt the larger financial institutions. Wachovia does have significant mortgage operations, which grew from the purchase of Golden West, exposing the company to precarious California and Western markets.
Fortunately, larger banks such as Wachovia, US Bancorp
Further fiscal Foolishness:
Wait! There's more. Be sure to read pre-earnings news and analysis for other Big Banks.
Bank of America, US Bancorp, and JPMorgan Chase are Motley Fool Income Investor recommendations. Discover the Motley Fool's top dividend-paying stock selections with a free 30-day trial.
Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. The Fool has an ironclad disclosure policy.