Wells Fargo & Co (NYSE:WFC) will report its second quarter results on Friday, July 11 before the market opens. The banking giant’s shares have gained 24% in the last 12 months. In April, the Fed authorized Wells Fargo to buy back 350 million of its shares through the first quarter of 2015. That’s a handsome increase over $5.36 billion in 2013. Its capital plan also included a dividend of $0.35 per share for Q2.

Wells Fargo

Wells Fargo has a solid history of beating earnings estimates

Wall Street expects the San Francisco-based bank to report earnings of $1.01 per share, up from $0.98 in the corresponding quarter last tear. However, total revenues are expected to decline 2.6% YoY from $21.38 billion to $20.82 billion. Wells Fargo’s revenues have declined in the past two consecutive quarters. In Q1, 2014, its revenues dropped by 4% to $21.62 billion. The quarter before that, it fell 6%.

Despite falling revenues, Wells Fargo’s income has gone up by an average of 12% YoY. For the full-year 2014, analysts on average call for $83.82 billion in revenues and $4.13 per share in earnings. Can Wells Fargo beat the consensus estimate? well, history suggests that it can. Over the last 16 quarters, the company has exceeded expectations in 13 quarters, and delivered two on-target results. It has missed the consensus only one by just a penny.

Can Wells Fargo improve its earnings despite falling revenues?

When profits exceed the consensus, Wells Fargo earns 4 cents, on average, more than expectations. During the previous quarter, the company earned $5.9 billion or $1.05 per share with $20.6 billion in revenues. The bank’s non-interest expenses slipped to $11.9 billion, while efficiency ratio improved by 40 basis points to 57.9%.

Wells Fargo has also strengthened its capital levels. As of March 31, the company had 11.36% common equity Tier 1 ratio under Basel III. While most analysts are optimistic about the company’s earnings given its track record, Thomas H. Kee Jr. of MarketWatch is cautious. He says there are some red flags. How long can Wells Fargo’s earnings continue to rise when its revenue has been declining?

Wells Fargo shares plunged 1.51% to $51.40 in pre-market trading Thursday.