Wells Fargo Earnings Preview: Double-Digit EPS Growth Expected - Citigroup (NYSE:C), Bank of America (NYSE:BAC)

Wells Fargo

WFC

is scheduled to report fourth-quarter and full-year 2011 results tomorrow morning, January 17. Of the slew of big banks reporting earnings this week, prospects for Wells Fargo seem pretty strong, as far as analysts are concerned. Investors will be hoping that the news is better than it was from JP Morgan Chase

JPM

on Friday, when is posted

disappointing quarterly results

. The consensus forecast of analysts it that Wells Fargo will report per-share earnings that rose from $0.61 per share a year ago to $0.72. That estimate has not changed over the past 60 days. And for the full year, analysts expect earnings to have risen 21.6% to $2.82 per share. Note that Wells Fargo's earnings have not fallen short of consensus estimates in the past ten quarters. For the three months that ended in December, revenues are predicted to have decreased 6.6% to $20.1 billion. Also, analysts forecast that full-year revenues slumped 5.4% from the previous year to $80.6 billion.

The Company

San Francisco-based Wells Fargo provides retail, commercial and corporate banking services in some 9,000 locations in 39 states and the District of Columbia. The company operates in three segments: Community Banking; Wholesale Banking; and Wealth, Brokerage, and Retirement. It was founded in 1929 and now is an S&P 500 component with a market cap of $156.2 billion. In the fourth quarter, Wells Fargo completed conversion of its remaining Wachovia branches. Also, it was voted number one in customer satisfaction. More recently, the board appointed a new lead director, and Wells Fargo launched a mobile-banking app for Android-powered devices.

Performance

The company has a long-term earnings per share growth forecast of 11.4%. Its PEG ratio is 0.8. The P/E ratio is greater than the industry average, but so is the operating margin. The dividend yield is 1.6%. Of 33 analysts surveyed, 25 rate it a Buy or Strong Buy; only one recommends selling. They have a mean price target on shares that is about 9% higher than the current share price. The share price is up almost 15% in the past month, rising above resistance at $27 it had faced since August. The price is well above the 50-day and 200-day moving averages. The stock has outperformed peers Bank of America

BAC

, Citigroup

and JP Morgan over the past six months.

See also: Earnings Expectations for the Week of January 16

ACTION ITEMS: Bullish: Investors interested in exchange traded funds invested in Wells Fargo might want to consider the following trades:

iShares Dow Jones US Financial Services IYG is more than 28% higher than the 52-week low.
iShares Dow Jones US Financial Sector IYF is almost 27% higher than the 52-week low.
Financial Select Sector SPDR XLF is almost 27% higher than the 52-week low.
PowerShares KBW Bank KBWB is more than 23% higher than the 52-week low.

Bearish: Traders may prefer to consider these alternative positions in the same industry:

PNC Financial PNC is up more than 46% from the 52-week low.
Royal Bank of Canada RY is up almost 23% from the 52-week low.
Toronto-Dominion Bank TD is up almost 19% from the 52-week low.

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