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Wells Fargo Fares Better than the Financial Sector in 2015

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Oct. 12 2015, Published 8:47 a.m. ET

Upcoming earnings announcement

Wells Fargo, the country’s largest mortgage lender, is scheduled to declare its 3Q15 earnings on October 14, 2015. Large banks have the potential to impact the broader market indices like the S&P Index Futures (SPY) and corresponding financial ETFs.

So far in 2015, Wells Fargo has slightly outperformed the financial sector. The Financial Select Sector SPDR ETF (XLF), which represents the financial sector, has lost 6% year-to-date. In comparison, Wells Fargo has generated returns of -4.9%. The Financial Select Sector SPDR ETF invests 8.7% of its portfolio in Wells Fargo.

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Performance of peers

This year banking stocks have witnessed volatility, as they are highly correlated to global events. Between January to July, banking stocks outperformed broad markets. However, in the last two months, all these gains have been erased.

Shares of large-cap banks like Goldman Sachs (GS), Citigroup (C), J.P. Morgan (JPM), and Bank of America (BAC) have lost value. They have generated negative returns of 7.6%, 5.1%, 1.0%, and 12.9%, year-to-date, respectively. Morgan Stanley is the worst performer among large-cap banks and has lost 15.7% so far during the year.

Company overview

Wells Fargo is a financial and bank holding company. It is the largest mortgage lender in the United States. The company provides retail, commercial, and corporate banking services.

The company has three operating segments: Community Banking, Wholesale Banking, and Wealth and Brokerage and Retirement. As of December 31, 2014, the company had assets of $1.7 trillion, loans of $863 billion, and deposits of $1.2 trillion.

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