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Wells Fargo (WFC) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
·3-min read

In the latest trading session, Wells Fargo (WFC) closed at $45.92, marking a -1.48% move from the previous day. This change lagged the S&P 500's daily loss of 0.18%.

Heading into today, shares of the biggest U.S. mortgage lender had gained 1.95% over the past month, lagging the Finance sector's gain of 2.22% and outpacing the S&P 500's gain of 0.04% in that time.

WFC will be looking to display strength as it nears its next earnings release. On that day, WFC is projected to report earnings of $0.93 per share, which would represent year-over-year growth of 240.91%. Our most recent consensus estimate is calling for quarterly revenue of $17.75 billion, down 0.48% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.87 per share and revenue of $71.19 billion, which would represent changes of +843.9% and -1.59%, respectively, from the prior year.

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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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 1.87% higher within the past month. WFC currently has a Zacks Rank of #3 (Hold).

Investors should also note WFC's current valuation metrics, including its Forward P/E ratio of 12.04. For comparison, its industry has an average Forward P/E of 12.36, which means WFC is trading at a discount to the group.

Also, we should mention that WFC has a PEG ratio of 1.18. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Banks - Major Regional was holding an average PEG ratio of 1.46 at yesterday's closing price.

The Banks - Major Regional industry is part of the Finance sector. This group has a Zacks Industry Rank of 132, putting it in the bottom 49% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. 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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