Wells Fargo (WFC 52.23, +0.79, +1.54%) is trading higher despite missing third
quarter earnings estimates this morning.
Third quarter earnings per share grew 27% year/year to $1.13, missing estimates by $0.04. Third quarter EPS included $0.03/share in costs from the redemption of Preferred Stock.
Revenue was slightly higher year/year at $21.9 bln, roughly in-line with estimates.
Net interest income was slightly higher sequentially, improving to $12.6 bln, and the net interest margin grew 1 basis point quarter/quarter to 2.94%. Book value grew 0.4% to $37.55/share.
Wells Fargo continues to deal with the ramifications of the loan scandal. Average deposits fell 3% and average loans fell 1%.
The market appears to be largely looking past those underperforming metrics as the headwinds are likely to abate over time.
Meanwhile, a strong economy, rising rates, and a steepening yield curve are bullish developments for banks.
Wells Fargo has a $250 bln market value and trades largely in-line with peers at ~1.4x book value and ~12x EPS estimates.
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