NEW YORK (TheStreet) -- Wells Fargo's (WFC) earnings may drop for the first time in 17 quarters, however, the nation's largest mortgage lender remains the surest way to invest in the U.S. banking sector. The bank has outperformed all of its peers this year, continuing gains it has made on the competition, and Wall Street analysts have a track record of incorrectly predicting Wells Fargo's declining profits.
Wells Fargo's earnings, scheduled for Friday, July 11, will be dictated by how fast ordinary Americans return to the housing market. Look for Wells Fargo's mortgage-related earnings to provide a clear picture of the state of the U.S. economy, after bad weather washed out much of the economic growth in the first half of 2014. Analysts expect this quarter that mortgage originations at Wells Fargo will return to 20%-plus growth.
Analysts forecast Wells Fargo will earn $1 a share in the second quarter, 5-cents below last quarter's EPS, possibly ending a multi-year trend of rising earnings. Revenue is forecast to drop about 3.4% to $20.8 billion, according to analyst estimates compiled by Bloomberg.
The San Francisco-bank is expected to originate $43 billion worth of mortgages, helping to drive a 3% increase in overall mortgage revenue. Even with strong growth in originations however, falling refinancing activity will likely make for a tough year over year comparison.