Wells Fargo (WFC) stock is down more than 6% at the start of trading Friday after the banking giant beat analysts’ expectations on the top and bottom lines for its second quarter, but its net interest income, a key metric for banks, failed to meet expectations.
In the quarter ended June 30, Wells Fargo’s revenue increased 0.8% year-over-year to $20.7 billion despite a 9.4% year-over-year decline in net interest income to $11.9 billion. Its earnings per share (EPS) increased 6.4% to $1.33 from the year-ago period.
“Our efforts to transform Wells Fargo were reflected in our second quarter financial performance as diluted earnings per common share grew from both the first quarter and a year ago,” Wells Fargo CEO Charlie Scharf said in a statement.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Wells Fargo Q2 earnings report
The headline results beat analysts’ expectations. Wall Street was anticipating revenue of $20.3 billion and earnings of $1.29 per share, according to CNBC. However, the reported $11.9 billion in net interest income came in well below the $12.1 billion analysts were expecting.
“We continued to see growth in our fee-based revenue offsetting an expected decline in net interest income,” Scharf said. “The investments we have been making allowed us to take advantage of the market activity in the quarter with strong performance in investment advisory, trading, and investment banking fees.”
Wells Fargo also said it repurchased over $12 billion of common stock during the first half of the year and reiterated its expectation of a 14% dividend increase in the third quarter, which it first announced in late June following the release of the Federal Reserve’s stress test results. Stock buybacks can boost value for shareholders.
JP Morgan Chase (JPM) and Citigroup (C) reported earnings this morning as well, as the start of a busy earnings calendar for this season.
JP Morgan reported revenue of $51 billion and earnings of $4.40 per share, topping expectations of revenue of $49.9 billion and earnings of $4.19 per share. Citigroup also reported a beat with revenue of $20.1 billion and EPS of $1.52 versus expectations of revenue of $20.07 billion and earnings of $1.39 per share.
Is Wells Fargo stock a buy, sell or hold?
Wall Street is bullish on the bank stock. According to S&P Global Market Intelligence, the average analyst target price for WFC stock is $64.16, representing implied upside of more than 14% to current levels. Additionally, the consensus recommendation is a Buy.
Related Content
-
Understand These Hobby Loss Rules to Reduce IRS Audit RisksThe Tax Letter The IRS will scrutinize tax returns reporting large losses from any activity that sounds like a hobby. Here is what you need to know.
-
Can a President Fix Inflation?Inflation has been a thorn in the side of many presidential administrations, but how much impact does the commander-in-chief have over price growth?
-
Stock Market Today: Stocks Pop After Powell's Jackson Hole SpeechFed Chair Powell's Jackson Hole speech struck a dovish tone which sent stocks soaring Friday.
-
Stock Market Today: Stocks Drop Ahead of Powell's Jackson Hole SpeechSentiment turned cautious ahead of Fed Chair Powell's highly anticipated speech Friday at the Jackson Hole Economic Symposium.
-
Should You Buy Nvidia Stock Before Earnings?Nvidia stock has recovered from its early August selloff, but shares could be volatile after the chipmaker's upcoming earnings report. Is it worth buying?
-
Peloton Wows Wall Street With Unexpected Revenue GrowthPeloton stock is soaring Thursday after the company reported its first year-over-year sales growth in nine quarters. Here's what you need to know.
-
Zoom AI Companion Efforts Fuel Earnings Beat, Stock SurgeZoom stock is rallying after the company reported solid earnings thanks to demand for its AI-powered collaboration tools. Here's what you need to know.
-
Why Snowflake Stock Is Sinking After a Q2 Earnings BeatSnowflake stock is lower Thursday even as the tech company disclosed a Q2 earnings beat and raised a key sales forecast. Here's what you need to know.
-
Stock Market Today: Stocks Rise After Jobs Data Lifts Rate-Cut OddsPreliminary data from the Bureau of Labor Statistics shows job growth was lower than previously estimated.
-
Japan's Stock Market Crash and Recovery: What Happened and What Investors Can DoJapan's stock market suffered its biggest one-day drop since Black Monday in August but quickly bounced. Here's what happened and what it means for investors.
