Expert reveals the top bank stock to own ahead of earnings

U.S. banks are scheduled to report their quarterly results next week; ahead of which, Barclays’ Jason Goldman picked Wells Fargo & Co (NYSE: WFC) as his favourite.

Wells Fargo stock is more rate-sensitive

The multinational financial services company is expected to earn $1.10 this quarter versus $1.17 a year ago.

Down about 30% from its year-to-date high, the Wells Fargo stock is particularly attractive for investors looking for “value”. On CNBC’s “Squawk Box”, Goldman said:

Going into the quarter, Wells Fargo stands out given the most benefit to higher rates. It’s trading not much more than tangible book for a company that we think in a few years is going to put up a mid-teens ROTCE.

Confidence in the management was among other reasons why he’s bullish on “WFC” that has a dividend yield of 2.79%.

U.S. banks as a group to perform well

Goldman has a similar outlook on the mega-cap bank as Wall Street that also recommends buying Wells Fargo stock and sees about a 20% upside in it on average.

Nonetheless, the third-quarter, he agreed, will likely be a good one for the U.S. banks across the board.

You’ll see pretty strong results. Net interest income should be another record as the group benefits from higher rates. Banks should benefit from volatility as well. And we expect loan losses to be at a 20 or even 50 years low.

Last month, the U.S. Federal Reserve signalled a terminal rate of 4.60% in 2023 (source). That suggests further, sizable hikes moving forward.