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Wells Fargo is slated to release its Q4 and full-year 2019 results on January 14, 2020. For FY 2019, Trefis estimates that the company will report:
Revenues would touch $85.0 billion primarily due to the expected revenue drop in the Community Banking business. However, it is still higher than the consensus estimate of $84.6 billion.EPS of $4.66 (vs. consensus estimate of $4.54) due to a combination of lower expenses and slightly higher drop in revenues weighing on the net income marginWe believe that stronger-than-expected revenues and earnings for FY 2019 will not boost Wells Fargo's stock price, once earnings are announced. As our forecast indicates that the bank's current price of $53 is already 5% above Wells Fargo's valuation of $51 a share.
(1) Revenues expected to be slightly above consensus estimates
Trefis estimates Wells Fargo's 2019 revenues to be $85 billion, slightly above the consensus estimate of $84.6 billion
Trefis Estimate of Total Revenues
(1) Community Banking $40.3 Bil (48%)
(2) Wholesale Banking $28.3 Bil (33%)
(3) Wealth & Investment Management
$16.4 Bil (19%)
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TOTAL $85.0 Bil
Consensus $84.6 Bil
Surprise $0.4 Bil
(2) EPS likely to narrowly beat consensus estimates
Wells Fargo's 2019 earnings per share (EPS) expected to be $4.66 per Trefis analysis, 3% higher than the consensus estimate of $4.54 per share
EPS - 2019E
Total Revenues $85.0 Bil
- Total Expenses $64.9 Bil (*)
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Net Income $20.2 Bil (**)
÷ Shares Outstanding 4.3 Bil
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EPS $4.66
Consensus $4.54
Surprise $0.12
(*) - The expense figure includes preferred dividend and other minority expenses
(**) - Numbers don't add up due to rounding
(3) Stock price estimate ~5% lower than market price
Trefis forecast for Wells Fargo's 2019 earnings is slightly higher than market expectations, however, P/E multiple is lagging. This works out to a fair value of $51 for Wells Fargo's stock as opposed to the current market price around $53.
Wells Fargo's Share Price [= A x B]
EPS - 2019E [A]
Trailing P/E Multiple [B]
Related Analysis
Wells Fargo Stock (NYSE:WFC)Wells Fargo Revenues: How Does Wells Fargo Make Money?All Trefis Industrials Company data
Detail about our forecast for Wells Fargo's (1) Revenues, (2) EPS, and (3) P/E Multiple follow:
Notably, we expect Wells Fargo's revenue to grow 1.3% in 2020, enabling the bank to cross $85.7 billion.
Our interactive dashboard analysis, How Does Wells Fargo Make Money?, provides an in depth view of the company's revenues along with our forecasts for the FY 2020.
For 2020, we believe that a slight growth in revenues and expenses will result in the adjusted net income margin figure improving to 23.8%
(3) A trailing P/E multiple of 11.0x looks appropriate for Wells Fargo's stock, as opposed to the current implied P/E multiple of 11.6x
We use our full cash flow model for Wells Fargo to arrive at a P/E multiple of 11.0x for a price estimate of $51
Note: P/E Multiples are based on Share Price at the end of the year, and reported (or expected) Adjusted Earnings for the full year
P/E Multiple WFC
P/E Multiple Citigroup
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P/E Multiple JPM
1. How to save your forecasts for Bristol-Myers Squibb:
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