Wells Fargo Q2 profit down 48%: Pro explains why stock is ‘very attractive’

Shares of Wells Fargo & Co (NYSE: WFC) are up 8.0% on Friday even after the financial services company reported a 48% hit to its Q2 profit and revenue that came in shy of Wall Street estimates.

Wells Fargo Q2 earnings snapshot

• Net income printed at $3.12 billion versus the year-ago figure of $6.04 billion
• Per-share earnings of 74 cents were down significantly from $1.38 last year
• On an adjusted basis, EPS stood at 82 cents in the recent financial quarter
• Revenue tanked 16% YoY to $17.02 billion as per the earnings press release
• FactSet consensus was for 80 cents of adjusted EPS on $17.48 billion in revenue
• Net interest income jumped 16% on a 37 bps increase in net interest margin

According to Wells Fargo, the hit to revenue was primarily related to divestitures and a slowdown in mortgage banking. The stock is down more than 35% for the year.

Stephanie Link reacts to Wells Fargo Q2 results

Reacting to the earnings report on CNBC’s “Squawk Box”, Hightower’s Stephanie Link said the banks are in a much better position than they were in the Great Financial Crisis.

Wells Fargo is trading at 0.9 times book, which, as per Link, is very attractive to own. Wall Street currently rates the stock at “overweight” with upside to $52.62 that translates to an over 25% increase in the stock price from here.