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Guilfoyle: Long Wells Fargo and Bank of America

Latest financial results from financials offer encouraging signs
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Bank of America  (BAC) - Get Bank of America Corp Report  and Wells Fargo  (WFC) - Get Wells Fargo & Company Report are two financial institution stocks worth holding onto in a portfolio, Real Money’s Stephen “Sarge” Guilfoyle argues.

Both Bank of America and Wells Fargo reported third quarter GAAP EPS that beat Wall Street’s estimates, which is a positive sign.

“I remain long both Wells Fargo and Bank of America,” Guilfoyle wrote in a recent Real Money Pro column. “Bank of America obviously posted the higher quality beat and is showing top line growth in many spaces where Wells Fargo is not. That said, Wells Fargo is more restricted in what they can do, but that does provide for a future catalyst... and I do believe that Charles Scharf is the right CEO for this firm at the right time.”

Wells Fargo reported GAAP EPS of $1.17 and beat Wall Street’s estimate by $0.17 based on revenue of $18.83 billion. Revenue did decline by 2.4% compared to last year, but the figure still beat expectations. Both consumer banking and lending and commercial experienced losses in revenue while corporate and investment banking and wealth and investment management reported increases in revenue.

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Wells Fargo paid a $250 million fine when the Office of the Comptroller said the company overcharged 700 commercial customers, spent $5.3 billion in share repurchases and doubled the quarterly dividend to $0.20 to a yield of 1.7%.

Bank of America reported GAAP EPS of $0.85 and beat estimates by $0.15 The company produced revenue of $22.77 billion, an increase of 12.2% year over year. The bank made money in all four of its segments, including consumer banking as revenue increased. Bank of America returned about $12 billion to shareholders.

Guilfoyle’s price target is $53 target for Bank of America and $61 for Wells Fargo.

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