Wells Fargo (WFC) stock: time to buy?

11:32 pm ET, 14 Oct 2018

Wells Fargo & Company (WFC) shares closed at $52.30 (up 2%) in last week's training. The company announced its quarterly earnings: revenue came at $21.94 billion (+0.4% year-over-year increase), which comprises a beat by $100M.  What's driving WFC stock price? What's Wells Fargo stock price forecast?

Wells Fargo's stock has been hit hard because of fake accounts scandal, unfriendly shareholder decisions, and more recently regulator-imposed asset cap. The bank is working hard to win the trust of its investors. Currently, its return on assets is very good compared to other big banks. The bank has announced a buy-back of around $33 billion over the next twelve months.  

Investors are buying the stock now because they feel it’s a value buy now currently.  On the other hand, some investors feel that the company’s regulatory issues are yet to be resolved. Last quarter’s revenue fell 3.1% to $21.55 billion and earnings per share came at $0.98 compared to $1.08 for the same period last year.

It's important to note that the share price appreciated upon earnings release despite the earnings miss.  Q3 Non-GAAP EPS came at $1.16, a miss by $0.03.  

What is the sentiment towards WFC stock? Our technical analysis shows that:

  • The stock short-term sentiment (next 30 days) is trending negative;
  • The mid-term sentiment (3-6 months) is trending negative;
  • The long-term sentiment (9-12 months) is trending negative. 

Over the last month, Wells Fargo & Company (WFC) returned -11.02%.

Wells Fargo & Company (WFC) average analyst price target ($62.59) is 19.08% above its current price ($52.56).

For the latest price and information on Wells Fargo & Company, please visit Finstead and search for "WFC price" or "WFC news".

Bank of America (BAC) earnings preview: expect revenue decline

4:24 am ET, 12 Jul 2018

Bank of America Corporation (BAC)  is expected to report earnings on July 16 before market open.  The report will be for the fiscal quarter ending June 2018.  Shares are trading at 28.83, down -0.76% from yesterday.

What are the BAC earnings expectations?  What news will the market be watching out for?  

Bank of America's strategy of simplification, efficiency, and risk reduction has slowly begun to pay off. Assets have remained fairly flat since 2009.  Management increased the bank's Tier 1 common ratio dramatically, closed nearly 25% of branches, and trimmed personnel dramatically. 

The bank's lending practices have also been revamped. Consumer loans are now made largely to customers with average FICO scores over 750, while the average American's score was 50 points lower.

Scale and scope advantages are increasingly important as the role of technology in banking grows. Bank of America generated noninterest income averaging just under 2% of total assets over the last three years, in line with JPMorgan Chase and not too far behind U.S. Bancorp and Wells Fargo, each averaging 2.2% of assets in fee income. Expenses are continuing to decline even as revenue grows.

The biggest risk to Bank of America's new, more conservative strategy is that its peers seem to be following the same playbook.  Competition for high-end credit card customers has increased, with firms like JPMorgan and American Express offering escalating perks and rewards for cardholders. Wells Fargo's long-standing emphasis on cross-selling multiple products produced exorbitant pressures on front-line employees and led to widespread fraud in the bank's branches. 

Bank of America Corporation, has a history of beating analysts’ earnings estimates. In the past four quarters, the company: 

  • Beat analyst EPS estimates by 3 cents ($.46 actuals vs. $.43 forecast) in FQ2’17;
  • Beat analyst EPS estimates by 2 cents ($.48 actuals vs. $.46 forecast) in FQ3’17;
  • Beat analyst EPS estimates by 3 cents ($.47 actuals vs. $.44 forecast) in FQ4’17;
  • Beat analyst EPS estimates by 4 cents ($.62 actuals vs. $.58 forecast) in FQ1’18.

For FQ2’18, EPS is expected to grow by 24% year-over-year to $.57, while revenue is expected to decline 3% year-over-year to $22.48 billion.  


Over the last month, Bank of America Corporation (BAC) returned -3.93%.

Bank of America Corporation (BAC) average analyst price target ($34.56) is 19.88% above its current price ($28.83).

For the latest price and information on Bank of America Corporation, please visit Finstead and search for "BAC price" or "BAC news".

Wells Fargo & Co (WFC) earnings preview: revenue decline to be seen

5:01 am ET, 11 Jul 2018

Wells Fargo & Company (WFC)  is expected to report earnings on July 13 before market open.  The report will be for the fiscal quarter ending June 2018. Shares are trading at $55.89, up 1.18%.

What are WFC earnings expectations?  What news will the market be watching out for?  

Wells Fargo is the top deposit gatherer in the United States. Its strategy rests on deep customer relationships, sound risk management, and operational excellence.  Wells Fargo consistently paid less for balance sheet funding than most of its competitors over the past decade, and has also generated more revenue per dollar of assets than most peers over time, because of a loyal base of longtime customers.

Unlike its major competitors, Wells is not a top player in the capital markets. Its business model is more akin to regional banks than to money center institutions. Wells Fargo generates less than half the investment banking fees of companies like JPMorgan Chase, Goldman Sachs, and Bank of America, and trading gains made up only a small percentage of noninterest income. 

Wells Fargo relies on the more stable revenue generated by its brokerage, advisory, and asset management businesses. It competes to a large extent with regional peers, and its scale advantages should grow in importance as technology and compliance spending increase fixed costs across the industry. Wells Fargo deserves a lower cost of capital--and higher multiple--than riskier peers.

Wells Fargo’s sales culture overheated in recent years. Rather than attempting to improve its customers’ financial lives, management chose to increase revenue at all costs, introducing poorly designed incentive programs for front-line employees. This decision led to widespread fraud and risked relationships and reputation built over decades. 

Customers did not abandon Wells Fargo amid scandals and new programs focused on deepening active relationships will actually generate more revenue--and less wasted employee time--than overly ambitious product sales goals.

Wells Fargo & Company has a mixed history of beating analysts’ earnings estimates.  In the past four quarters, the company: 

  • Beat analyst EPS estimates by 5 cents ($1.07 actuals vs. $1.02 forecast) in FQ2’17;
  • Delivered on the analyst EPS estimate ($1.04 actuals vs. $1.04 forecast) in FQ3’17;
  • Missed analyst EPS estimates by 7 cents ($.97 actuals vs. $1.04 forecast) in FQ4’17;
  • Beat analyst EPS estimates by 5 cents ($1.12 actuals vs. $1.07 forecast) in FQ1’18.

For FQ2’18, EPS is expected to grow by 5% year-over-year to $1.12, while revenue is expected to decline 3% year-over-year to $21.56 billion.  

Over the last month, Wells Fargo & Company (WFC) returned +0.56%.

Wells Fargo & Company (WFC) average analyst price target ($61.44) is 9.93% above its current price ($55.89).

For the latest price and information on Wells Fargo & Company, please visit Finstead and search for "WFC price" or "WFC news".

JPMorgan Chase (JPM) earnings preview: will it beat the Street?

9:14 am ET, 09 Jul 2018

J P Morgan Chase & Co (JPM) is expected to report earnings on July 13 before market open.  The report will be for the fiscal quarter ending June 2018.  The shares are trading at 103.72, up 0.11% from yesterday.

What are the JPM earnings expectations?  What news will the market be watching out for?  

JPMorgan Chase’s combination of scale, diversification, and sound risk management seems like a simple path to competitive advantage, but few other firms have been able to execute a similar strategy.  JPMorgan now benefits from a nearly unrivaled combination of scale and scope within the United States, creating unique opportunities including its partnerships with other leading firms like Visa and Amazon.

JPMorgan has become the largest bank in the country, with about $1.4 trillion in deposits. Around $400 billion of these funds bear no interest costs whatsoever. Within payments, JPMorgan is the largest issuer of credit cards in the U.S. and the second-largest acquirer. The company’s investment bank is the leading global generator of fees, and the company’s fixed-income, commodities, and currency trading operations are the largest in the world.

As a systemically important firm, JPMorgan is likely to remain under the regulatory microscope for years to come. Regulatory relief will help smaller banks at the expense of "too big to fail" institutions.

JPMorgan Chase & Co. has a mixed history of beating analysts’ earnings estimates.  In the past four quarters, the company: 

  • Beat analyst EPS estimates by 14 cents ($1.71 actuals vs. $1.57 forecast) in FQ2’17;
  • Beat analyst EPS estimates by 9 cents ($1.76 actuals vs. $1.67 forecast) in FQ3’17;
  • Beat analyst EPS estimates by 7 cents ($1.76 actuals vs. $1.69 forecast) in FQ4’17;
  • Missed analyst EPS estimates by 2 cents ($2.26 actuals vs. $2.28 forecast) in FQ1’18;

For FQ2’18, EPS is expected to grow by 31% year-over-year to $2.24, while revenue is expected to grow 5% year-over-year to $27.66 billion.  


Over the last month, J P Morgan Chase & Co (JPM) returned -3.82%.

J P Morgan Chase & Co (JPM) average analyst price target ($120.91) is 16.57% above its current price ($103.72).

For the latest price and information on J P Morgan Chase & Co, please visit Finstead and search for "JPM price" or "JPM news".

JPMorgan Chase (JPM): What Does The Future Look Like?

6:45 pm ET, 05 Apr 2018

 JPMorgan Chase’s (NASDAQ: JPM) stock price barely increased in today’s trading

Jamie Dimon, the company's CEO, praised President Trump because of his tax cuts and deregulation while criticizing his trade and immigration policies beacause they will likely hurt growth in the United States.

According to Dimon, it is possible for the bank to grow and penetrate into new markets by investing excess capital stemming from the new federal tax cuts and constructive regulatory environment since the 2016 presidential elections.

According to Dimon, JPMorgan can earn a 17% return on the tangible equity that exceeds the target before the enactment of corporate tax cuts. It is also above the company’s 2017 performance by almost 4%.

CEO Dimon pointed out to Wall Street's low-profit estimates and declared that he would concentrate on buybacks to return capital to JPM's shareholders. This is indeed good news for the shareholders.

Dimon holds an opinion that buying back a big block of share would enhance the earnings per share by 2%-3% in the upcoming 5 years, with the tangible book value remaining virtually constant. Currently, the company has 1.6 times tangible book ratio which is below Dimon's threshold.

Per Finstead Research, JP Morgan has the average price target of $119. The stock price has an upside of about 9%.

JPMorgan's valuation is considered to be not overly conservative or aggressive. Based on the forward P/E ratio, JPMorgan is ahead of CMSGS, and  BAC, but behind WFC.  

5 Key Things You Should Understand About The Banking Sector

4:44 pm ET, 22 Jan 2018

If you're pondering investments in the banking sector, there are some key themes for 2018 you should understand that may shape your thinking about investing in large banks such as JP Morgan Chase, Citi, Wells FargoBank of America, or even smaller, regional ones.

The growth of the banking sector has been decreasing over the last 12 months. High interest rates involved have made large corporations to opt for borrowing and debt issuance at the prime rate on credit facilities. 

Here are the five things to know about the banking sector in 2018.

1. Credit Card Lending: In terms of loan development, credit card lending remains a major focus with solid gains and high consumer confidence in employment. Over the years, consumer finance companies and banks have been leading in rewarding credit card programs that attract new customers. Loan growth for most banks remains between single-digit low and medium range in 2018. 

2. The Increase of Net Charge-offs: While credit card lending may affect future margins, the net charge-offs may rise gradually with the maturing of the credit cycle though it can still remain below the historical standards. 

3. Flattening of the Productivity Curve: This is due to the long maturities that have not complied with the short-term rate rise. There are still high expectations of Fed hikes in 2018 with higher productivity continuing to slow down. 

4. Expansion of Interest Margin: This will occur even if the flatter yield curve does not offer similar lending business benefit as the initial rate increases of Fed. 

5. Favorable Regulatory Environment: This is a result of the new stance on deregulation of the new administration despite the stalling of the wider legislative efforts. With this, the earnings from the financial sector will remain favorable in relation to the broader market.

Though there have been variations in the banking sector, the requirements for reduced capital could create room for more lending. This is expected to significantly benefit most financial institutions in 2018. 

Over the last year, JPM returned +36.25%. This return is higher than the Money Center Banks industry (22.22%), the Financial sector (11.89%), and S&P 500 (24.73%) returns.

Over the last year, Citi returned +39.58%.  See below.

Over the last year, BAC returned +40.59%.   Details below.

WFC returned only +17.54%.  While this return is higher than the Financial sector return (11.89%), it is lower than the Money Center Banks industry (22.22%) and S&P 500 (24.73%) returns.

Wells Fargo: Why Buy The Stock?

6:57 pm ET, 12 Jan 2018

Wells Fargo WFC

Wells Fargo (NYSE: WFC) published quarterly earnings this morning that beat analyst EPS estimates but fell short on revenue.  The profit boost from the tax bill is visible, and the Bank is hoping for a much better 2018, having gone through a very challenging 2017.

There are several factors that make Wells Fargo stand out from the rest, which include the following: 

1.  The company’s strong organic growth (reflected by consistent revenue growth, as well as compound annual growth rate). Wells Fargo's net interest income is also anticipated to rise significantly. 

2.  Reduced margin pressure for the company that is occasioned by a gradual change in the rate environment. This has resulted in an increase in the company’s net interest margin. The company has subsequently raised its prime lending rate accordingly. 

3.  The Company’s solid business mix, strong consumer franchise, and diverse geographical presence.  Wells Fargo has a balanced spread income and highly diversified fee revenue, so it's able to guarantee consistent growth earnings and furnish households with a vast range of products. 

4.  Wells Fargo’s future expansion plans are also quite encouraging. The Company intends to spread its tentacles in the global market and also strengthen its asset management business.  It plans to do so mainly by assimilating local franchises, offering a wider range of products, and increasing more options for customers. 

5.  Wells plans to operate at the low end of the targeted range of the return on equity and the return on assets.  This shift in fundamentals is expected to help the Bank achieve its targets with time. 

Over the last year, WFC returned +14.77%. This return is higher than Financial Sector (8.99%) but lower than Money Center Banks Industry (16.97%) and S&P 500 (22.72%) returns.

Wells Fargo & Company (WFC) Stock Guide

Updated at: 8:03 pm ET, 18 Sep 2020

Before we start: if you're looking for WFC stock price, you can quickly find it out by visiting Finny and typing "WFC quote". If you're looking for a quick scoop on WFC stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "WFC". You'll get all this info in one place. Or you can just type "WFC news" to get the latest stock news.

Looking to buy or sell Wells Fargo & Company (WFC)? Interested in getting the full scoop on WFC, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this WFC stock guide, we'll address key questions about WFC, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are WFC earnings?
2. What is WFC dividend?
3. What is WFC dividend yield?
4. What is WFC stock forecast (i.e., prediction)?
5. WFC buy or sell? What is WFC Finny Score?
6. What are the reasons to buy WFC? Why should I buy WFC stock?
7. What are the reasons to sell WFC? Why should I sell WFC stock?
8. What are WFC key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are WFC earnings?

WFC trailing 12-month earnings per share (EPS) is $0.93.

2. What is WFC dividend?

WFC forward dividend is $0.40.

3. What is WFC dividend yield?

WFC forward dividend yield is 1.66%.

Analyst Predictions

4. What is WFC stock forecast (i.e., prediction)?

Based on WFC analyst price targets, WFC stock forecast is $29.62 (for a year from now). That means the average analyst price target for WFC stock is $29.62. The prediction is based on 31 analyst estimates.

The low price target for WFC is $21.00, while the high price target is $65.00.

WFC analyst rating is Hold.

Analysis

5. WFC buy or sell? What is WFC Finny Score?

#{finnyScore:75}Our quantitative analysis shows 6 reasons to buy and 2 reasons to sell WFC, resulting in Finny Score of 75.

6. What are the reasons to buy WFC? Why should I buy WFC stock?

Here are the reasons to buy WFC stock:

  • Rising interest rates and deregulation will unleash earnings power, while Wells Fargo's wide economic moat will ensure that benefits flow through to shareholders.
  • Wells Fargo's business model is difficult to duplicate. Future CEOs are likely to have been steeped in the company's culture for decades, ensuring that the company's competitive advantage is maintained.
  • Wells offers the scale advantages of a money center bank without the risks and volatility associated with extensive capital markets operations.
  • Organic growth remains a key strength at Wells Fargo, as reflected by its revenue growth story. Revenues grew at a CAGR of 1.3% over the last five years (2013-2017), supported by rise in net interest income. Moreover, growth in net interest income for 2018 is dependent on a variety of factors, including the level and of slope of the yield curve as well as deposit betas and earning asset growth trends.
  • With the gradual change in the rate environment, margin pressure for Wells Fargo seems to be easing. In 2017, the company reported a rise in net interest margin (NIM), after years of facing a declining trend.
  • Wells Fargo's growth prospects look encouraging, given its diverse geographic footprint and solid business mix which enable it to sustain consistent earnings growth. Further, strong consumer franchise allows the company to offer a vast range of products to households. The company is balanced between fee and spread income while sources of fee generation are diversified.
  • Wells Fargo’s expansion plans have historically included a large number of acquisitions including the Wachovia merger in 2008. Moreover, since 2011, the company has completed a number of opportunistic transactions. Further, the expansion moves has been supported by the purchase of a number of businesses from GE Capital in recent times.
  • Despite the macro pressure, Wells Fargo’s credit quality continues to normalize. Credit metrics continued to improve over the last few years as the overall financial condition of businesses and consumers strengthened and the housing market in many areas improved, except for the third quarter of 2012, as a result of the new regulatory guidance. This trend is expected to continue, thereby providing room to drive future earnings.
  • WFC profitability is improving. The YoY profit margin change was 2.27 percentage points. See WFC profitability chart.
  • WFC forward dividend yield is 1.66%, higher than the industry (1.38%) and sector (1.11%) forward dividend yields. See WFC forward dividend chart.
  • WFC Price/Book ratio is 0.62, which is low compared to its industry peers’ P/B ratios. See WFC forward Price/Book ratio chart.
  • WFC Price/Sales ratio is 1.58, which is low compared to its industry peers’ P/S ratios. See WFC forward Price/Sales ratio chart.
  • WFC average analyst price target ($29.62) is above its current price ($25.13). See WFC price target chart.
  • WFC cash to debt ratio is 1.47, higher than the average industry (0.16) and sector (0.18) cash to debt ratio. See WFC cash to debt chart.

7. What are the reasons to sell WFC? Why should I sell WFC stock?

Let's look at the reasons to sell WFC stock (i.e., the bear case):

  • The fraudulent account scandal will permanently damage Wells Fargo's brand and fracture its longstanding relationships with customers.
  • Branches are declining in value as customers increasingly conduct transactions online.
  • More than half of revenue depends to some extent on the yield curve, and low rates have now persisted for almost a decade.
  • Troubles mounted at Wells Fargo, following the revelation of opening of millions of unauthorized accounts, in September 2016. Recently, the bank has been slapped with new sanctions including a cap on the assets position for the past misconducts by the Federal Reserve which will impact the financial performance and result is customers attrition. ‘Cross-selling’, which has been the company’s key strength in recent years, drew regulators’ attention as they discovered that thousands of employees of the bank had unlawfully enrolled consumers in products and services without their knowledge or consent, in order to receive incentives for meeting sales targets.
  • Following the approval of its 2017 capital plan, Wells Fargo hiked its quarterly dividend to 39 cents per share in July 2017. The approved plan also includes share repurchase programs of up to $11.5 billion for the four-quarter period beginning in the third quarter of 2017. Recently, the company’s board of directors also increased share repurchase authorization by an additional 350 million shares.
  • Wells Fargo is facing challenges to control costs. Over the past few quarters, the company is experiencing increasing non-interest expenses. Notably, non-interest expenses recorded a five-year (2013-2017) CAGR of 4.6%.
  • WFC quarterly revenue growth was -60.50%, lower than the industry and sector average revenue growth (1.44% and 1.27%, respectively). See WFC revenue growth chart.
  • WFC PEG ratio (P/E adjusted for growth) is 642.97, which is high compared to its industry peers’ PEG ratios. See WFC PEG chart.

Key Stats

8. What are WFC key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for WFC:

Metrics WFC
Price $23.66
Average Price Target / Upside $29.62 / 25.22%
Average Analyst Rating Hold
Forward Dividend Yield 1.66%
Industry Banks - Global
Sector Financial Services
Number of Employees 261,700
Market Cap $99.09B
Forward P/E Ratio 11.51
Price/Book Ratio 1.58
Revenue (TTM) $62.66B
YoY Quarterly Revenue Growth -60.50%
Profit Margin 9.19%

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