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Wells Fargo (WFC) Gains But Lags Market: What You Should Know

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Wells Fargo (WFC - Free Report) closed at $40.81 in the latest trading session, marking a +1.95% move from the prior day. The stock lagged the S&P 500's daily gain of 1.97%. Meanwhile, the Dow gained 1.88%, and the Nasdaq, a tech-heavy index, added 0.24%.

Prior to today's trading, shares of the biggest U.S. mortgage lender had lost 9.31% over the past month. This has was narrower than the Finance sector's loss of 9.76% and the S&P 500's loss of 9.93% in that time.

Wells Fargo will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $1.11, down 5.13% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $18.72 billion, down 0.62% from the prior-year quarter.

WFC's full-year Zacks Consensus Estimates are calling for earnings of $4 per share and revenue of $72.93 billion. These results would represent year-over-year changes of -19.19% and -6.53%, respectively.

Investors might also notice recent changes to analyst estimates for Wells Fargo. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. Within the past 30 days, our consensus EPS projection has moved 0.05% higher. Wells Fargo is holding a Zacks Rank of #2 (Buy) right now.

Investors should also note Wells Fargo's current valuation metrics, including its Forward P/E ratio of 10.01. This represents a premium compared to its industry's average Forward P/E of 9.23.

Meanwhile, WFC's PEG ratio is currently 0.98. 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. WFC's industry had an average PEG ratio of 1.15 as of yesterday's close.

The Banks - Major Regional industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 55, which puts it in the top 22% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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