Author Topic: What to Expect From Wells Fargo $WFC Earnings This Week  (Read 730 times)

ThePitBoss

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Wells Fargo (WFC) along with the other money center major banks ]JPMorgan Chase (JPM) and Bank of America (BAC) kick off 2017 earnings season on Friday. Since Donald Trump won on Election Day there has been a huge run higher on WFC and the other bank stocks. .

Wells Fargo (WFC) Consensus Forecast

Thomson Reuters consensus estimates are calling for Wells Fargo of $1.00 in EPS with revenue of $22.47 billion. The fourth quarter of last year reported EPS of $1.03 and $21.59 billion revenue.  Wells Fargo is still recovering from a sham-account scandal but has managed to avert much of that negativity and news cycle with the Trump focus.
 

The bank rally has been fueled by expectations for easier regulations including a possible repeal of DoddFrank and infrastructure spending. The Federal Reserve decision to raise rates has also helped banks.  The new surge in home prices has also buoyed optimism for the mortgage business and banks profits thereto.

WFC shares closed at $55.04 on Friday and the 52-week range is $43.55 to $58.02.

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ThePitBoss

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Wells Fargo (WFC) fell short on both the top and bottom lines but investors  likely focused on the industry's outlook just a week away from President-elect Trump's inauguration. WFC is the biggest U.S. mortgage lender.

Earnings Results: EPS of 96 cents on revenue of $21.6 billion from $5.2Bil or $1.00 per share last year, revenue remained flat. WFC reported a 6% decline in 4Q16 earnings due lower non-interest income and the inclusion of hedge ineffectiveness accounting impact of $592MM, as well as higher non-interest expenses.
- Trading operations lost $109 million.

Estimates were: EPS down 3% to $1.00, with revenue up 4% to $22.451 billion



Non-interest income for 4Q16 declined to $9.2Bil from $10.4Bil in 3Q16. The linked-quarter results included a $592MM loss due to the impact of higher interest rates and currency movements on hedging results reflected in other income. The linked-quarter declines also reflected decreases in trading income and mortgage banking fees.
 
Net interest income for 4Q16 rose by $450MM from last quarter, on growth in loans and investment securities, higher interest income on trading assets, higher variable income including periodic dividends and fees and a modest benefit from higher interest rates. Net interest margin rose 5 basis points to 2.87% from 3Q16.

Loans and Deposits
 
WFC's total loans were $967.6Bil at Dec. 31, 2016, up $6.3Bil from Sept. 30, 2016. Loan growth was affected by the deconsolidation of certain previously sold reverse mortgage loans, which resulted from the sale of the related servicing, and reduced real estate 1-4 family first mortgages.

WFC's total asset under management for 4Q16 declined by 2% to $482Bil from the previous year. This decline was primarily due to equity and money market net outflows. This is partially offset by higher market valuations, fixed income inflows and assets acquired during the quarter.
 
WFC's total average deposits for 4Q16 were $1.3 trillion, up 2% from last quarter, driven by both commercial and consumer growth. Investment securities were $407.9Bil at Dec. 31, 2016, up $17.1Bil from 3Q, as about $44Bil of purchases, predominantly federal agency MBS in the available-for-sale portfolio, were partially offset by run-off.



Charts via https://alphastreet.com/app#/company/WFC

Reaction: Wells Fargo & Co NYSE: WFC - Jan 13, 11:17 AM EST $55.79 +1.29 +2.37%

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ThePitBoss

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Wells Fargo & Co. WFC was downgraded to Hold from Buy at Argus, with the $53.78 share price having exceeded the firmís prior $53 price target.

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The downgrade reflects the rebound in Wells Fargo shares since the November 8 election and includes the prospects for more revenue headwinds as it strives to repair its reputation.
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