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Wells Fargo (WFC) Soars 5.2%: Is Further Upside Left in the Stock?

Zacks Equity Research
·2-min read

Wells Fargo (WFC) shares soared 5.2% in the last trading session to close at $56.39. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 6.1% loss over the past four weeks.

The company witnessed a strong price increase as its longstanding battle to escape a Federal Reserve restriction imposed on its assets since 2018 has entered a new phase. The bank has submitted a third-party review of its risk and control overhauls to the Fed for scrutiny and approval, as per a Bloomberg report, citing people familiar with the matter.

This biggest U.S. mortgage lender is expected to post quarterly earnings of $1.28 per share in its upcoming report, which represents a year-over-year change of -7.9%. Revenues are expected to be $20.4 billion, down 2.2% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Wells Fargo, the consensus EPS estimate for the quarter has been revised 0.5% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on WFC going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Wells Fargo is part of the Zacks Banks - Major Regional industry. KeyCorp (KEY), another stock in the same industry, closed the last trading session 1% higher at $16.55. KEY has returned -2.2% in the past month.

KeyCorp's consensus EPS estimate for the upcoming report has changed -1.8% over the past month to $0.28. Compared to the company's year-ago EPS, this represents a change of -3.5%. KeyCorp currently boasts a Zacks Rank of #3 (Hold).

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Zacks Investment Research