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Wells Fargo's Third Quarter Earnings Report
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WFC
Wells Fargo (NYSE:WFC) announced its results for the most recent quarter on October 12, 2012. Wells Fargo provides financial services in mainly wholesale banking, mortgage banking, consumer finance, equipment leasing, agricultural finance and commercial finance.
In most situations, when earnings do not meet analyst estimates, a business' stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge. SEE: Surprising Earnings Results
The Numbers: Wells Fargo managed to beat EPS estimates, though the company's revenues failed to top expectations. The company reported 88 cents per share versus the 87 cents per share estimate and revenues of $21.2 billion versus the $21.36 billion estimate. EPS rose 22.2% while revenue declined 0.3% from the same period last year. Slumping revenue in the last quarter ends Wells Fargo's streak of two consecutive quarters of revenue increases. For the third quarter, the company reported profit of $4.9 billion. This is 20.8% higher than the year-ago quarter. Last quarter marked the third in a row of rising net income.
Management Quote: "Through the efforts of our more than 265,000 team members, we've now achieved six consecutive quarters of record net income and EPS," said Chairman and CEO John Stumpf. "By focusing on earning all of our customers' business and providing outstanding service, we continued to generate growth across our diversified set of businesses. In the third quarter, core loans grew by $11.9 billion and we saw continued strength in our mortgage and deposit businesses. We remained diligent in managing costs and continued to have strong underlying credit performance as our loss mitigation efforts and the low interest rate environment helped improve affordability for our customers."
A Look Back: Net income has increased 18.5% year-over-year on average across the last five quarters. The biggest gain came in the third quarter of the last fiscal year, when income climbed 21.4% from the year-earlier quarter.
Looking Ahead: When earnings estimates stay consistent leading up to earnings season, this usually shows analysts accurately predicted earnings estimates and business is stable. Be cautious though as this may also be a warnings sign that earnings could come at a huge surprise to the upside or downside as analyst did not correctly predict earnings. Steady earnings estimates mean there is not enough change going on with the company to make analysts change their opinions. When earning estimates are steady, investors can look at the revenue trend for a more fundamental indicator. For the fiscal year, the average estimate has moved up from $3.27 a share to $3.31 over the last ninety days.
In most situations, when earnings do not meet analyst estimates, a business' stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge. SEE: Surprising Earnings Results
The Numbers: Wells Fargo managed to beat EPS estimates, though the company's revenues failed to top expectations. The company reported 88 cents per share versus the 87 cents per share estimate and revenues of $21.2 billion versus the $21.36 billion estimate. EPS rose 22.2% while revenue declined 0.3% from the same period last year. Slumping revenue in the last quarter ends Wells Fargo's streak of two consecutive quarters of revenue increases. For the third quarter, the company reported profit of $4.9 billion. This is 20.8% higher than the year-ago quarter. Last quarter marked the third in a row of rising net income.
Management Quote: "Through the efforts of our more than 265,000 team members, we've now achieved six consecutive quarters of record net income and EPS," said Chairman and CEO John Stumpf. "By focusing on earning all of our customers' business and providing outstanding service, we continued to generate growth across our diversified set of businesses. In the third quarter, core loans grew by $11.9 billion and we saw continued strength in our mortgage and deposit businesses. We remained diligent in managing costs and continued to have strong underlying credit performance as our loss mitigation efforts and the low interest rate environment helped improve affordability for our customers."
A Look Back: Net income has increased 18.5% year-over-year on average across the last five quarters. The biggest gain came in the third quarter of the last fiscal year, when income climbed 21.4% from the year-earlier quarter.
Looking Ahead: When earnings estimates stay consistent leading up to earnings season, this usually shows analysts accurately predicted earnings estimates and business is stable. Be cautious though as this may also be a warnings sign that earnings could come at a huge surprise to the upside or downside as analyst did not correctly predict earnings. Steady earnings estimates mean there is not enough change going on with the company to make analysts change their opinions. When earning estimates are steady, investors can look at the revenue trend for a more fundamental indicator. For the fiscal year, the average estimate has moved up from $3.27 a share to $3.31 over the last ninety days.
by
Investopedia Staff
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