Wall Street foresees a strong economic rebound in 2021, with financial giants Bank of America (BAC), JPMorgan Chase (JPM) and Citibank (C) all expecting big growth this year. But Wells Fargo (WFC) tops all the big banks in terms of estimated EPS gains.
While one of the country’s largest banks, Wells Fargo hasn’t posted a quarter of positive growth for both the top and bottom lines since Q2 2019. But investors are banking on a strong rebound.
For 2021, Wells Fargo sees earnings growth of 91%, followed by a 26% rise in 2022. That significantly outpaces consensus analyst estimates for BAC stock (32% in 2021, 17% in 2022), JPM stock (29%, 8%) and C stock (38%, 21%).
Boosted by those forecasts of a turnaround in 2021 and beyond, WFC stock earns a spot on Leaderboard and continues to rally from the coronavirus it went through last year. Citibank, BAC and JPM stock have also come off those pandemic-driven lows.
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Size Matters: Fed May Lift Asset Cap On Wells Fargo
In 2018, the Federal Reserve placed limits on Wells Fargo’s size in response to a scandal aimed at hitting its sales goals by creating millions of phony accounts in consumers’ names.
But last month, Bloomberg reported Fed officials “privately signaled” that they accept Wells Fargo’s proposal to repair its risk management and governance practices. That further bolsters the bank’s prospects, which have been improving since Charles Scharf left Visa (V) to join as the new CEO in September 2019.
On Feb. 18, that development, as well as the strengthening of the banking and financial sector due to a recent spike in interest rates, earned WFC stock mention as the IBD Stock Of The Day.
Meanwhile, the banking industry and financial sector continue to benefit from a recent spike in interest rates.
WFC Stock Rises As Citibank, BAC And JPM Stock Breakout
As banking stocks rebound, BAC stock and JPM stock have become extended from breakouts in February. C stock is trading at the upper end of its buy zone.
WFC stock is out of buy range following a short consolidation. In a bullish sign, the stock is guiding its 21-day exponential moving average higher, a bullish sign. It’s a one-quarter position on Leaderboard.
Wells Fargo remains well off the highs it hit before the scandal in 2018. Investors will have to wait and see if WFC stock can sustain its recent rebound and the Fed lifts the cap on the bank’s asset size.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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