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Wells Fargo’s (WFC) Q1 Earnings & Revenues Beat Estimates


Have you been eager to see how Wells Fargo & Company WFC performed in Q1 in comparison with the market expectations? Let’s quickly scan through the key facts from this San Francisco-based money center bank’s earnings release this morning:

An Earnings Beat

Wells Fargo came out with earnings per share of $1.12, beating the Zacks Consensus Estimate of $1.07. Moreover, results were up from the prior-year quarter earnings of $1.03. Results were benefitted from lower provisions and higher interest income, partially offset by elevated interest expense and non-interest expenses.

Notably, results are preliminary which might be impacted on resolution of matters with Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC) related to the bank’s compliance risk management program with a charge of $1 billion in civil money penalties.

How Was the Estimate Revision Trend?

You should note that the earnings estimate for Wells Fargo depicted neutral stance prior to the earnings release. The Zacks Consensus Estimate has remained unchanged over the last seven days.

Wells Fargo has a decent earnings surprise history. Before posting earnings beat in Q1, the company delivered positive surprises in two of the prior four quarters. Overall, the company surpassed the Zacks Consensus Estimate by an average of 0.32% in the trailing four quarters.

Revenue Came In Higher Than Expected

Wells Fargo posted revenues of $21.9 billion, outpacing the Zacks Consensus Estimate of $21.7 billion. Yet, revenues decreased from $22.3 billion in the year-ago quarter.

Key Stats to Note:

  • Pre-tax pre-provision profit (PTPP) : $7.7 billion
  • ROA (net income to average assets): 1.26%
  • ROE (net income applicable to common stock to shareholders’ equity): 12.37%

What Zacks Rank Says

The estimate revisions that we discussed earlier have driven a Zacks Rank #3 (Hold) for Wells Fargo. However, since the latest earnings performance is yet to be reflected in the estimate revisions, the rank is subject to change. While things apparently look favorable, it all depends on what sense the just-released report makes to the analysts.

(You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.)

How the Market Reacted So Far

Following the earnings release, Wells Fargo shares were up more than 1% in the pre-trading session. This is in line with what the stock witnessed in the prior-day’s session. Clearly, the initial reaction shows that the investors have considered the results in their favor. However, the full-session’s price movement may indicate a different picture.

Check back later for our full write up on this Wells Fargo earnings report later!

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