Core Viewpoint - Wells Fargo is expected to report a slight decline in revenues for the first quarter of 2025, with challenges in net interest income and non-interest revenues impacting overall performance [2][3]. Financial Performance - The Zacks Consensus Estimate for first-quarter 2025 revenues is $20.8 billion, indicating a 0.3% year-over-year decline [2]. - The consensus estimate for earnings has been revised downward to $1.23, reflecting a 2.4% decline from the prior-year quarter [3]. - Wells Fargo has a history of earnings surprises, with an average surprise of 11.23% over the trailing four quarters [5]. Revenue Breakdown - Net interest income (NII) is estimated at $11.85 billion, showing a marginal rise from the previous quarter [9]. - Mortgage banking revenues are expected to decline by 7.1% to $273.1 million due to stagnant refinancing activities [10]. - Investment advisory and asset-based fee revenues are projected to increase by 1.4% to $2.6 billion [11]. - Investment banking (IB) income is estimated at $714.7 million, reflecting a 1.4% sequential decline [13]. - Total non-interest income is expected to be $8.94 billion, indicating a 4.7% sequential increase [14]. Expense and Asset Quality - Expenses are anticipated to rise due to investments in technology and digitalization efforts [14]. - Total non-accrual loans are estimated at $7.89 billion, suggesting a 2.2% sequential increase [15]. - Non-performing assets are expected to rise to $8.1 billion, indicating a 1.7% increase from the previous quarter [15]. Market Position and Valuation - Wells Fargo's shares have outperformed the industry and major peers, with a forward P/E ratio of 10.15X, which is below the industry average of 10.39X [21]. - The stock is trading at a premium compared to Bank of America and Citigroup, which have forward P/E ratios of 9.24X and 7.41X, respectively [23]. Strategic Outlook - Under CEO Charlie Scharf, Wells Fargo is enhancing its compliance framework and risk management techniques [24]. - There is optimism regarding the potential lifting of the $1.95 trillion asset cap imposed after the 2018 scandal, which could facilitate loan growth [25]. - The bank is implementing cost-cutting measures to lower operating expenses and improve long-term profitability [27].
Wells Fargo Set to Report Q1 Earnings: How to Play the Stock Now?