Bank of America (BAC) – Get the Bank of America Corp report and Wells Fargo (WFC) – Get the Wells Fargo & Company Report are two stocks of financial institutions worth keeping in a portfolio, says Stephen “Sarge” Guilfoyle of Real Money.
Bank of America and Wells Fargo released third-quarter GAAP EPS higher than Wall Street estimates, which is a positive sign.
“I stay a long time at both Wells Fargo and Bank of America”, Guilfoyle wrote in a recent Real Money Pro column. “Bank of America has obviously posted the best quality pace and is showing revenue growth in many spaces where Wells Fargo is not. Having said that, Wells Fargo is more limited in what it can do, but it is a catalyst for the future … and I think Charles Scharf is the right CEO for this company at the right time.
Wells Fargo reported GAAP EPS of $ 1.17 and beat the Wall Street estimate of $ 0.17 based on revenue of $ 18.83 billion. Revenue was down 2.4% from last year, but the figure remains above expectations. Personal banking services, loans and businesses recorded revenue losses, while business and investment banking services and wealth and investment management recorded revenue increases.
Wells Fargo was fined $ 250 million when the Office of the Comptroller said the company overcharged 700 business customers, spent $ 5.3 billion on share buybacks and doubled the quarterly dividend to $ 0.20 for a yield of 1.7%.
Bank of America reported GAAP EPS of $ 0.85 and exceeded estimates by $ 0.15. The company achieved sales of $ 22.77 billion, an increase of 12.2% year-over-year. The bank made money in all four of its segments, including personal banking, as revenues increased. Bank of America returned approximately $ 12 billion to shareholders.
Guilfoyle’s price target is $ 53 for Bank of America and $ 61 for Wells Fargo.