Wells Fargo Earnings Preview: Another Record Quarter Expected

Wells Fargo

, which has managed consistent growth in revenue and income figures quarter after quarter despite weak economic conditions, is scheduled to report second-quarter 2012 results Friday, July 13, before the U.S. markets open.

Analysts on average predict that Wells Fargo will report per-share earnings of $0.81 for the quarter and say that its revenue totaled $2.8 billion. In the same period of last year, the company reported $0.70 per share and $20.4 billion in revenue. Note that the earnings per share (EPS) estimate has remained the same over the past 60 days. And Wells Fargo has only fallen short of consensus EPS estimates in one of the past five quarters, and then by just a penny per share. The positive surprise in the first quarter was 2.7 percent. Wells Fargo attributed better-than-expected first-quarter results to improvements in its loan portfolio, as well as gains from trading activities, debt securities sales and equity investments. It was the company's seventh straight quarterly rise in net income. The forecast for the current quarter has EPS up about 14% year over year and revenues that are 6.7% higher. So far, analysts expect full-year per-share earnings to be higher than last also by about 14%.

Wells Fargo & Company operates in three segments: Community Banking; Wholesale Banking; and Wealth, Brokerage, and Retirement. It serves customers through around 9,000 banking locations in 39 states and the District of Columbia. The company was founded in 1929 and is headquartered in San Francisco. It is an S&P 500 component with a market capitalization of more than $175 billion. That is greater than the market caps of its main competitors: Bank of America

, Citigroup

and JP Morgan Chase

(which also reports its second-quarter results on Friday). During the three months that ended in June, Wells Fargo launched its Abbot Downing brand to serve ultra-high net worth clients, said it would acquire Merlin Securities, launched a new person-to-person money transfer service and announced a partnership with HDFC Bank

of India.

Wells Fargo's long-term EPS growth forecast is a modest 9.7%. Its price-to-earnings (P/E) ratio is higher than the industry average, but so is its operating margin. The return on investment is more than 12%, which is higher than those of the competitors mentioned above. Short interest is less than 1 percent of the float. Of 24 analysts who follow the stock, 21 rate it a Buy or Strong Buy. Their mean price target is more than 12 percent higher than the current price. Shares have traded mostly between $30 and $34 since February. The share price is currently about 20 percent higher year to date, or less than 4 percent below the 52-week high. It is also above both the 200-day and 50-day moving averages. Over the past six months, the stock has outperformed Citigroup and JP Morgan, as well as the S&P 500.