by Ian Harvey
July 17, 2019
Wells Fargo & Co (NYSE:WFC)
Wells Fargo & Co beat quarterly profit estimates but reported weaker net interest income (NII), pointing to rising deposit costs. Shares of Wells Fargo closed down 3.02% to $45.30 on Tuesday.
And, “Earnings Predictions”members made 78% potential profits.
GREED CAN BE THE UNDOING OF A GOOD PROFIT!
PATIENCE PAYS OFF!
YOU NEED TO BE IN TO PROFIT!
The Result So Far………
Yesterday, before the market opened, Wells Fargo reported earnings second-quarter net income of $6.2 billion, or $1.30 a share, in the second quarter, up from $5.2 billion, or 98 cents a share, in the year-earlier period, to beat expectations of $1.30 a share.
Revenue was unchanged at $21.6 billion but was above expectations of $20.9 billion.
However, even though Well Fargo beat estimates, shares of Well Fargo & Co. sank to close down 3.02% to $45.30 after yet another disappointing earnings report and conference call with analysts, as downbeat guidance on net interest income and expenses, and still no word on a new chief executive, overshadowed profit and revenue beats.
Wells Fargo management said that it will need to make more investments before it can free itself from a regulatory cap imposed on the company in the wake of its fake accounts scandal.
In its earnings report for the second quarter, Wells Fargo said expenses for 2019 will be “near the high end” of its previously given estimates as it continues to spend on improving compliance and risk management.
Wells Fargo CFO John Shrewsberry told reporters Tuesday afternoon that there is “back and forth” with regulators on these investments but declined to offer a timeline on when the company would be lifted from the Federal Reserve’s asset cap that it imposed in February 2018.
“We’ve taken the guidance off the table because it isn’t something we can guide to on a time frame perspective,” Shrewsberry said.
So, for “Earnings Predictions Members”, who managed to execute this trade
recommended by Stock Options Made Easy, and then exited on the day; a profit of 78% was to be made. The cost of the put option was originally $1.60; and as the
share price fell as far as $45.22 during the day’s trading; the option price climbed
as high as $2.87.
A NICE POTENTIAL PROFIT TO START THE WEEK!
For background information in regard to the reasoning behind the option trade…..
…….taken from…… “Earnings Predictions for the Week Beginning July 15, 2019”
Wells Fargo & Co (NYSE:WFC), one of the largest U.S. mortgage lenders, will report earnings before the market opens. The consensus earnings estimate is $1.16 per share on revenue of $20.87 billion; but the Whisper number is a bit higher at $1.18 per share.
Consensus estimates are for year-over-year earnings growth of 7.41% with revenue decreasing by 16.61%.
Short interest has increased by 30.0% and overall earnings estimates have been revised lower since the company's last earnings release.
WFC stock has traded in a fairly tight sideways pattern throughout 2019, and the company really needs to post solid top and bottom line numbers for Wall Street to turn bullish on the stock. Earnings have outpaced estimates the last two quarters and sales were better than expected last quarter after missing estimates in the previous release.
Option trade to consider: Buy the WFC AUG 16 2019 47.500 PUT at approximately $1.50.
AS ALWAYS THE DECISION IS YOURS!
As you would have by now realized, some of our trades are based on earnings predictions. This is not to say all trades recommended to members follow this pattern, but it is obvious that it did apply in this case; although the result of the earnings report certainly helped boost the profits when presented. During earnings season this strategy of predicting earnings has been very profitable.
Sometimes it is our approach to predict whether a company will beat or miss estimates, whether the stock will appreciate or depreciate as a result and what strategies investors and traders can use – such as found with the “Earnings Predictions Program”. This type of prediction is based on thorough investigation and fundamentally based research, and the results have been exceptional.
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!
Strategies to Consider……
When To Exit A Trade Based On Earnings?.....Read Article
"Trading Capital Management" is a key component of your trading strategy. The strategy, on which we base our trades to achieve maximum profit, and to minimize loss, is contingent on using an equal amount of money for each trade.……continue reading this article……
Our proven track record says it all!!
Members of Stock Options Made Easy are provided with an extensive reason as to which direction a stock will move after earnings, followed up by a recommended options trade.
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