Abhoy Sarkar's Avatar
Abhoy Sarkar
published in Blogs
Oct 14, 2020
Wells Fargo (WFC, $23.51) misses Q3 earnings estimates

Wells Fargo (WFC, $23.51) misses Q3 earnings estimates

Wells Fargo third-quarter earnings fell short of analysts' expectations, on net interest income drop.

The bank’s  the third quarter earnings came in at 42 cents a share, for, vs. declining from the year-ago quarter’s  92 cents a share. The figure is lower than the 44 cents a share expected by analysts at FactSet.

Net interest income of  $9.4 billion was below analysts' forecasts of $9.6 billion. Non-interest income was $9.5 billion, down $891 million. Average deposits was $1.4 trillion, up + 8% year-over-year.

Revenue came of $18.9 billion was lower than the year-ago period’s $22 billion. However, it managed to beat FactSet estimates of $18 billion. 

Commercial loans were down $30 billion year-over-year, suggesting  lower loan demand as well as loan pay-downs, Wells Fargo said.

According to Tickeron, WFC in -5.03% downward trend, sliding for three consecutive days on September 23, 2020

Moving lower for three straight days is viewed as a bearish sign. Keep an eye on this stock for future declines. Considering data from situations where WFC declined for three days, in 176 of 307 cases, the price declined further within the following month. The odds of a continued downward trend are 57%.

Current price $23.53 crossed the support line at $23.60 and is trading between $23.60 support and $22.59 support lines. Throughout the month of 09/11/20 - 10/13/20, the price experienced a +2% Uptrend. During the week of 10/06/20 - 10/13/20, the stock enjoyed a +2% Uptrend growth.

Technical Analysis (Indicators)

Bearish Trend Analysis

The Stochastic Indicator demonstrated that the ticker has stayed in the overbought zone for 5 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.

WFC broke above its upper Bollinger Band on October 08, 2020. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

Bullish Trend Analysis

The Momentum Indicator moved above the 0 level on October 05, 2020. You may want to consider a long position or call options on WFC as a result. In 45 of 88 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are 51%.

The Moving Average Convergence Divergence (MACD) for WFC just turned positive on October 05, 2020. Looking at past instances where WFC's MACD turned positive, the stock continued to rise in 23 of 44 cases over the following month. The odds of a continued upward trend are 52%.

WFC moved above its 50-day Moving Average on October 07, 2020 date and that indicates a change from a downward trend to an upward trend.

The 10-day Moving Average for WFC crossed bullishly above the 50-day moving average on October 12, 2020. This indicates that the trend has shifted higher and could be considered a buy signal. In 8 of 16 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are 50%.

Following a +4.63% 3-day Advance, the price is estimated to grow further. Considering data from situations where WFC advanced for three days, in 126 of 296 cases, the price rose further within the following month. The odds of a continued upward trend are 43%.

The Aroon Indicator entered an Uptrend today. In 87 of 214 cases where WFC Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 41%.

Fundamental Analysis (Ratings)

Tickeron has a positive outlook on this ticker and predicts a further increase by more than 4.00% within the next month with a likelihood of 52%. During the last month, the daily ratio of advancing to declining volumes was 1.86 to 1.

The Tickeron Profit vs. Risk Rating rating for this company is 100 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. WFC’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 87, placing this stock worse than average.

The Tickeron Seasonality Score of 95 (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.

The Tickeron SMR rating for this company is 92 (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Price Growth Rating for this company is 62 (best 1 - 100 worst), indicating fairly steady price growth. WFC’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron Valuation Rating of 16 (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (0.64) is normal, around the industry mean (0.83). WFC's P/E Ratio (28.28) is considerably higher than the industry average of (10.97). Projected Growth (PEG Ratio) (1.15) is also within normal values, averaging (4.45). Dividend Yield (3.57) settles around the average of (2.75) among similar stocks. P/S Ratio (1.15) is also within normal values, averaging (1.57).

The Tickeron PE Growth Rating for this company is 10 (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

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