Why Wells Fargo's Revenue Miss Isn't Worrying Wall Street

Wells Fargo (WFC) is one of the best S&P 500 stocks Wednesday after the financial services company beat profit expectations for its fourth quarter and issued a strong outlook for fiscal 2025.

In the quarter ending December 31, Well Fargo said its revenue slipped 0.5% year over year to $20.4 billion. Its earnings per share (EPS) increased 66.3% from the year-ago period to $1.43.

"Our solid performance this quarter caps a year of significant progress for Wells Fargo," said CEO Charlie Scharf in a statement. "Our earnings profile continues to improve, we are seeing the benefit from investments we are making to increase our growth and improve how we serve our customers and communities, we maintained a strong balance sheet, we returned approximately $25 billion of capital to shareholders, and we made significant progress on our risk and control work."

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

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.

Sign up

The results were mixed compared with analysts' expectations. While Wells Fargo fell short of the $20.6 billion in revenue Wall Street anticipated, its earnings per share came in above the $1.35 per share analysts guided for, according to CNBC.

Included in the shareholder-friendly initiatives Wells Fargo undertook during the fourth quarter was the repurchase of roughly 57.8 million shares for approximately $4 billion, bringing its total repurchases in 2024 to approximately $20 billion. Stock buybacks are another way for corporations to boost value for shareholders.

For the full fiscal year, Wells Fargo said it expects to achieve net interest income growth of 1% to 3% over 2024's figure of $47.7 billion.

Wells Fargo's impressive EPS beat "along with a strong statement about continued growth and productivity gains lifted guidance more than expected," says Brian Mulberry, client portfolio manager at Zacks Investment Management. "This is evidence that the expense management project continues to pay dividends on the balance sheet, combined with better net interest income results boosting revenues by as much as 3% demonstrates that WFC is in a strong balance sheet position."

Is Wells Fargo stock a buy, sell or hold?

Wells Fargo has outperformed the broader market over the past 12 months, up 60% on a total return basis (price change plus dividends) vs the S&P 500's 24% gain. Unsurprisingly, Wall Street remains bullish on the financial stock.

According to S&P Global Market Intelligence, the average analyst target price for WFC stock is $77.30, representing implied upside of nearly 3% to current levels. Additionally, the consensus recommendation is a Buy.

Financial services firm BofA Securities is one of the more bullish outfits on the large-cap stock, calling it a "top pick" in the banking industry, along with a Buy rating and $84 price target.

"We remain bullish on bank stocks and expect the group to build on 2024 gains and outperform the S&P," wrote BofA Securities analyst Ebrahim Poonawala in a January 7 note, adding that the outperformance would be driven by several factors, including solid earnings-per-share growth, discounted valuation and increased ownership.

Related Content

• Earnings Season: Live Updates and Commentary
• Is JPMorgan Chase Stock a Buy, Hold or Sell After Earnings?
• Citigroup Stock Jumps on Earnings, $20 Billion Stock Buyback News