Gediminas Jasionis

Wells Fargo & Company (NYSE: WFC) ready to rock

by Gediminas Jasionis April 9, 2009
wells-fargo-logo.jpgWells Fargo & Company (NYSE: WFC) stock showed improvement today after the company announced expectations of better than expected quarterly performance. The share price jumped an stounding 33% right after the news was announced. The price dropped slightly though after the initial optimism met reality and didn't allow the stock to stay too overpriced.

It was only preliminary results that were published, so the end results might be slightly different. Yet, the announced $3 billion in earnings over the first quarter were more than a double what had been expected. Such news has not only driven the company's share price up, but also influenced the whole market rally because of the clear signs of banking sector recovery.

Wells Fargo stated their performance has been influenced for the better by the acquisition of Wachovia Corporation. Specifying the numbers, the bank said that about 40 percent of its $20 billion revenues were contributed by Wachovia. Better than expected performance also allowed Wells to make a payment of $372.0 million in dividends to the Treasury Department. Wells Fargo was supported by the Troubled Asset Relief Program, and was among the first to slice a piece of the dedicated $700 billion, getting $25 billion in October 2008.

Wells had only one quarter of losses over the whole market crisis. Over the Q4 2008 the company had lost $2.7 billion. Considering the current improvement, that was a mere set back. Their share price has dropped somewhat on those losses but didn't go below $10 for an extended period. With the improvement in revenues and profit generation, we might see Wells' share price forming a long term uptrend from the given moment. 

Reference:

News annoucement on the issue

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