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Wells Fargo's Earnings Date Nears, Is It a Buy?

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As banks’ earnings season kicks off, Wells Fargo is scheduled to report its earnings this week. When is the company's earnings date? What is Wells Fargo's stock price today? What is the outlook for the stock?

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Wells Fargo's earnings date

Wells Fargo is scheduled to release its third-quarter earnings on Oct. 14. The results will be announced pre-market at around 8:00 a.m. ET. The earnings season for banks will start with JPMorgan Chase and Citigroup on Tuesday, Oct. 13. Bank of America will likely release its results on Oct. 14.

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While banks’ earnings aren't expected to be pleasant amid the ongoing coronavirus pandemic, investors will be looking forward to several updates. Wells Fargo trimmed the guidance for its net interest income for 2020 to $40.5 billion from $41 billion–$42 billion due to lower expectations for loan growth.

Wells Fargo has a large mortgage origination business, which has seen progress during the third quarter. The future outlook could be the key to the stock price movement. Due to high refinance activity, the mortgage activity has remained strong overall.  Therefore, investors will be looking closely at the changes in the company’s mortgage banking fees.

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Wells Fargo CFO John Shrewsberry commented at a conference last month that trust and investment fees should be stronger in the third quarter. He also expected stronger card fees in the third quarter compared to the second quarter. We'll have to see how these parameters have improved sequentially.

Investors should also keep a close eye on increased provisions for loan losses during the third quarter. The future magnitude of cost-cutting will also be important to watch.

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Wells Fargo stock pre-market today

Wells Fargo’s stock price has declined by 53 percent year-to-date, which is a worse performance than its peers. Apart from the general decline due to the coronavirus pandemic, company-specific issues have kept Wells Fargo's stock price under pressure. On Oct. 12, Wells Fargo's stock price gained 1.5 percent to $25.68. In pre-market trading on Oct. 13, at 5:30 a.m. ET, the stock price was trading with marginal gains of 0.04 percent at $25.69.

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Wells Fargo's dividend

While most of the banks have been impacted negatively by the coronavirus pandemic, company-specific issues have exaggerated the impact on Wells Fargo. A number of banks, including JPMorgan Chase and Citigroup, have kept their dividends steady. In contrast, Wells Fargo had to make deep cuts to its dividend payments.

In July 2020, Wells Fargo announced that it would cut its quarterly dividends by 80 percent. The announcement came after the Federal Reserve’s stress test mandated a dividend cut. Wells Fargo cut its quarterly dividend from $0.51 to $0.10. Currently, the bank's dividend yield is close to 1.6 percent. 

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Wells Fargo's stock forecast

Among the 30 analysts covering Wells Fargo stock, 12 have a buy, 13 have a hold, and 5 have a sell rating on the stock. The consensus target price is $29.96, which implies an upside potential of 16.7 percent based on the current market price.

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Analysts are divided between recommending the stock as a buy versus a hold. Almost double the fall in the stock price compared to its peers might make the stock look attractive on valuations. However, there are still a lot of issues with the bank, which keeps analysts on the sideline. The deep cuts to Wells Fargo's dividends also influenced its consensus hold rating despite a steep fall in the stock price. 

Wells Fargo investor relations

Wells Fargo's third-quarter results will be available on the company's investor relations website. The company will also host a live conference call to discuss the results on Oct. 14 at 10:00 a.m. ET. The call will be available at 866-872-5161 (U.S. and Canada) or 440-424-4922 (International). The call will also be available online on the company's website and on a separate webcast. You can listen to the call recording from Oct. 14–Oct. 28. 

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