Friday, January 18, 2013

Wells Fargo – Sentiment Rebounds Ahead of Earnings

Wells Fargo (WFC) is scheduled to release Q1 earnings this Wednesday April 21st, before the market opens. Average analyst estimates for the regional bank are .39/share in EPS and $21.69 billion in Revenue. Twenty-six analysts track the stock with five upward EPS revisions in the last 30 days and no downward EPS revisions in the last 30 days. Last quarter, Wells Fargo exceeded analyst expectations by .09/share, .08/share vs. -.01/share.

I always find this a tough period waiting to see if the company is going meet, exceed, or miss their earnings estimates. One thing I have discovered of value is to analyze sentiment moves in a stock ahead of the company’s earnings release. In the case of Wells Fargo, I will use the piqqem sentiment index for Wells Fargo to see how sentiment has changed in the last quarter, for the months within that quarter, and from the end of the reporting quarter thru today.

I’m looking for moves or changes that may foreshadow the earning release. (piqqem leverages the ‘wisdom of crowds’ by allowing its users to vote on the price direction of a stock and then applies its own propriety factors to calculate sentiment for a security. In their model, -100 is the lowest and 100 is the highest sentiment).

Sentiment for Wells Fargo

Source Piqqem

Will Wells Fargo outperform Bank of America (BAC) and JP Morgan (JPM)? Or will the regional bank continue to struggle with the likes of Citigroup (C)?

The above chart shows Wells Fargo’s sentiment moving up 9 pts from their last earnings announcement and flat for the overall quarter. Sentiment for the S&P was down 14 pts in the same period which makes Wells Fargo’s sentiment increase even more impressive. On the Piqqem scale, Wells Fargo’s sentiment rating of 27.12 is considered a buy and this absolute sentiment indicates a quality stock. Only Wells Fargo knows their actual results, but current sentiment points to the regional bank delivering good news on Wednesday.

Author's Disclosure: no Positions

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