Wells Fargo Q3 Results Beat Estimates; Shares Fall 1.5%

Multinational financial services company Wells Fargo (WFC) reported better-than-expected financial results for the third quarter of 2021. However, shares closed 1.5% down since total revenue declined year-over-year.

Headquartered in California, the company offers banking, insurance, investments, mortgage, consumer, and commercial financial services.

Earnings per share (EPS) grew 67% year-over-year to $1.17, beating the Street’s estimate of $0.99. Total revenue declined 2% to $18.83 billion, slightly above analysts’ expectations of $18.35 billion.

The Consumer Banking and Lending business segment’s revenue fell 4% year-over-year to $8.8 billion. Revenue from the Commercial Banking segment decreased 7% to $2.1 billion. (See Insiders’ Hot Stocks on TipRanks)

The Corporate and Investment Banking segment’s revenue grew 2% year-over-year to $3.4 billion. Revenue from the Wealth and Investment Management segment rose 10% to $3.6 billion. The Corporate segment’s revenue slipped 20% to $1.3 billion.

CEO of Wells Fargo, Charlie Scharf, said, “The actions we’re taking to improve operating effectiveness and financial returns are coming through in our results, in addition to the benefits we’re experiencing from the economic recovery. We recorded a $1.7 billion pre-tax reduction in the allowance for credit losses and had strong equity gains.”

“More importantly, charge-offs were low, net interest income stabilized and period-end loans grew for the first time since first quarter 2020. Expenses continued to decline as we made progress on our efficiency initiatives, and we increased our capital return to shareholders by repurchasing $5.3 billion of common stock and increasing our dividend,” Scharf added.

Last week, Robert W. Baird analyst David George maintained a Buy rating on the stock with a price target of $50 (10.4% upside potential).

The analyst expects the company to report EPS of $1.39 in the fourth quarter.

Overall, the stock has a Moderate Buy consensus rating based on 6 Buys and 7 Holds. The average Wells Fargo price target of $49.50 implies 9.3% upside potential. Shares have gained nearly 97.4% over the past year.