Here's What Hedge Funds And The Buy Side Are Saying About Wells Fargo

| About: Wells Fargo (WFC)
Wells Fargo & Company (NYSE:WFC) is set to release FQ4’2013 earnings before the market opens on Tuesday, January 14th. WFC is well known for its thriving retail banking division, Wells Fargo Bank N.A. Through Wells Fargo Bank N.A., the company has become the 2nd largest bank in terms of deposits, debit cards, and home mortgage services. Reduced reliance on investment banking relative to other major banks has helped Wells Fargo stay under the radar while some competitors have been making headlines for the wrong reasons.
The information below is derived from data submitted to the Estimize platform by a set of Buy Side and Independent analyst contributors.image
The current Wall Street consensus expectation is for WFC to report 98c EPS and $20.585B revenue while the current Estimize consensus from 28 Buy Side and Independent contributing analysts is 99c EPS and $20.650B revenue.
Wells Fargo has beaten the Wall Street profit consensus in each quarter over the past year. In each of these quarters, the Estimize consensus from Buy-side and Independent contributing analysts has been more optimistic than Wall Street and therefore more accurate. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors, Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market’s actual expectations.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a small difference between the consensuses.image
The distribution of estimates published by analysts on Estimize range from 94c to $1.01 EPS and $20.400B to $21.000B in revenues. This quarter we’re seeing an average distribution of estimates for Wells Fargo. The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution signaling the potential for greater volatility post earnings, a smaller vice versa.

Over the past 4 months we have seen upward analyst profit revisions revisions, and downward revenue revisions.This quarter the Estimize EPS consensus has increased from 97c to 99c while Wall Street has returned to their starting point of 98c. Wall Street has lowered its revenue expectation from $21.229B to $20.585B while Estimize has reduced its consensus from $20.796B to $20.650B.image
The analyst with the highest estimate confidence rating this quarter is Analyst_7718081 who projects 98c EPS and $20.579B in revenue. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which look at correlations between analyst track records and tendencies as they relate to future accuracy. In this case the highest rated analyst is expecting WFC to report in line with the Street on profit but come up slightly short on revenue. image

Throughout the past 2 years WFC has met or exceeded the Wall Street profit consensus in each quarter. This quarter contributing analysts on the Estimize platform are expecting Wells Fargo to beat the Street again by a small margin.

Disclosure: No positions