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Wells Fargo's (WFC) Q2 Earnings Miss on Lower Revenues

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Have you been eager to see how Wells Fargo & Company (WFC - Free Report) performed in Q2 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 Miss

Wells Fargo came out with adjusted earnings per share of $1.08, missing the Zacks Consensus Estimate of $1.12. Lower revenues and higher expenses were primarily responsible for the miss. Results were in line with the prior-year quarter earnings.

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 miss in Q2, the company delivered positive surprises in two of the prior four quarters. Overall, the company surpassed the Zacks Consensus Estimate by an average of 0.71% in the trailing four quarters.

Revenue Came In Higher Than Expected   
Wells Fargo posted revenues of $21.6 billion, outpacing the Zacks Consensus Estimate of $21.5 billion. Yet, revenues decreased from $22.2 billion in the year-ago quarter.

Key Stats to Note:


  • Pre-tax pre-provision profit (PTPP) : $7.6 billion
  • ROA (net income to average assets): 1.10%
  • ROE (net income applicable to common stock to shareholders’ equity): 10.60%

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 unfavorable, 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 down more than 2% 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 not 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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