Wells Fargo (NYSE:WFC) - Share price, News & Analysis

Q: What is the Fair Price of WFC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

WFC ($45.94) is trading below our estimate of [[fair value]] ($82.77)

WFC fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	1/6
Past Performance	3/6
Financial Health	6/6
Dividends	4/6

WFC Stock Overview

Rewards

Trading at 44.5% below our estimate of its fair value

Earnings are forecast to grow 14.3% per year

Risk Analysis

Unstable dividend track record

Wells Fargo Competitors

Bank of America

NYSE:BAC

US$291.7b

Citigroup

NYSE:C

US$105.3b

JPMorgan Chase

NYSE:JPM

US$358.2b

U.S. Bancorp

NYSE:USB

US$72.5b

Price History & Performance

Summary of all time highs, changes and price drops for Wells Fargo
Historical stock prices
Current Share Price	US$45.94
52 Week High	US$60.30
52 Week Low	US$36.54
Beta	1.18
1 Month Change	11.70%
3 Month Change	8.84%
1 Year Change	-8.80%
3 Year Change	3.49%
5 Year Change	-11.11%
Change since IPO	1,524.40%

Recent News & Updates

Aug 03

Wells Fargo (NYSE:WFC) Has Announced That It Will Be Increasing Its Dividend To $0.30

Wells Fargo & Company's ( NYSE:WFC ) dividend will be increasing from last year's payment of the same period to $0.30...

Jul 26

Is Wells Fargo Stock A Buy After Earnings? Wait For Another Sell-Off First

Wells Fargo delivered a Q2 earnings card that may have disappointed some investors and the media. However, the post-earnings performance indicated the market is forward-looking. Our pre-earnings buy thesis on WFC has played out accordingly. However, we urge some caution now, as it closes in on a key resistance level. WFC remains cheap relative to its historical averages. However, we believe the market has de-rated WFC since its February highs. Therefore, it's prudent to revise our valuation benchmarks. Accordingly, we revise our rating from Buy to Hold. We urge investors to wait for a retracement first before adding. Thesis Wells Fargo (WFC) delivered a "disappointing" Q2 card, but the market rejected further selling downside as it closed in (last traded at $43.90) on our pre-earnings Buy thesis with a near-term price target of $44. Therefore, our thesis on WFC has played out accordingly, despite the seemingly worsening macro headwinds (remember, the market always looks forward). We urge investors to look ahead, as we believe the market has likely priced in significant headwinds affecting its massive mortgage business. Therefore, the post-earnings surge wasn't surprising to us, despite the negative media headlines. Notwithstanding, we also noted that the market had de-rated WFC, despite expecting a recovery in its EPS through FY24. Therefore, we believe it's critical for investors to consider how the market intends to value WFC in the current environment to determine a reasonable valuation for WFC moving forward. Our price action analysis suggests that WFC seems overbought in our short- and medium-term charts. Therefore, we believe a retracement could follow. WFC is also closing in on its near-term resistance ($46), which was rejected by robust selling pressure in May. Therefore, we encourage investors to be cautious about adding at the current levels. Accordingly, we revise our rating on WFC from Buy to Hold. We encourage investors to bide their time and wait for a meaningful retracement first to assess its support zones. What To Expect After Earnings? Wells Fargo adjusted EPS change % consensus estimates (S&P Cap IQ) The media was disappointed with the bank's earnings as the WSJ reported: "Market downturn weighs on Wells Fargo Profit." It also highlighted the downbeat tone from management on the impact of macro headwinds, particularly in the origination momentum (down 36%) of its mortgage business. CFO Mike Santomassimo also accentuated (edited): The mortgage market is expected to remain challenging in the near term, and it's possible that we have a further decline in mortgage banking revenue in the third quarter. (Wells Fargo Q2 earnings call) Notwithstanding, the bank remains confident that it can continue to leverage rising interest rates to compensate for weakness in other segments, as CEO Charles Scarf highlighted (edited): Looking ahead, our results should continue to benefit from the rising interest rate environment, with growth in net interest income expected to more than offset any further near-term pressure on noninterest income. - Barron's The consensus estimates (bullish) suggest that Wells Fargo should recover its adjusted EPS growth cadence markedly from FY23 as it laps FY21's challenging comps (also attributed to its massive reserve release). Therefore, we believe the post-earnings strength seen in WFC corroborates our observation that the market has likely looked past its current headwinds. Accordingly, we believe investors can look forward to better times ahead, as its EPS growth momentum is projected to reach a nadir in Q2. Is Wells Fargo Stock Predicted To Go Up? WFC price chart (weekly) (TradingView) As seen above, WFC has surged markedly from its June and July lows as the market disregarded its weak Q2 card. We believe the market's reaction suggests it has already anticipated such weakness, given the battering from its highs in February 2022. However, as WFC closes in on its near-term resistance of $46, we urge some caution, as WFC could likely come under significant selling pressure at that level. WFC YTD performance % (koyfin) Notwithstanding, we observed that WFC outperformed its broad financial peers in the Financials ETF (XLF) YTD, as seen above. Notably, WFC posted YTD returns of -9.05%, well ahead of the XLF's YTD return of -15.66%. WFC/XLF price chart (weekly) (TradingView) We also observed the outperformance on the WFC/XLF's medium-term chart. Notably, the outperformance has continued to gain cadence since WFC/XLF reached its bottom in November 2020. Furthermore, the market also seems supportive of denying further downside, as seen in the April and June 2022 lows. While they don't constitute bear trap price structures, we observed robust rejection of selling pressure as buyers rushed in to support the lows, overcoming the bears resolutely. Therefore, it appears the long-term underperformance of WFC against the XLF could be a thing of the past if it can keep up its buying support. WFC normalized P/E trend (S&P Cap IQ) Some investors could argue that our caution at the current levels is unjustified, as WFC remains well below its average valuation levels.

Shareholder Returns

	WFC	US Banks	US Market
7D	5.0%	5.3%	3.2%
1Y	-8.8%	-10.9%	-10.2%

Return vs Industry: WFC exceeded the US Banks industry which returned -10.9% over the past year.

Return vs Market: WFC exceeded the US Market which returned -10.1% over the past year.

Price Volatility

Is WFC's price volatile compared to industry and market?
WFC volatility
WFC Average Weekly Movement	5.4%
Banks Industry Average Movement	3.7%
Market Average Movement	7.7%
10% most volatile stocks in US Market	16.9%
10% least volatile stocks in US Market	3.2%

Stable Share Price: WFC is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: WFC's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1852	243,674	Charlie Scharf	https://www.wellsfargo.com

Wells Fargo & Company, a diversified financial services company, provides banking, investment, mortgage, and consumer and commercial finance products and services in the United States and internationally. It operates through four segments: Consumer Banking and Lending; Commercial Banking; Corporate and Investment Banking; and Wealth and Investment Management. The Consumer Banking and Lending segment offers diversified financial products and services for consumers and small businesses.

Wells Fargo Fundamentals Summary

How do Wells Fargo's earnings and revenue compare to its market cap?
WFC fundamental statistics
Market Cap	US$174.25b
Earnings (TTM)	US$16.49b
Revenue (TTM)	US$76.67b

10.6x

P/E Ratio

1.1x

P/B Ratio

Is WFC overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
WFC income statement (TTM)
Revenue	US$76.67b
Cost of Revenue	US$0
Gross Profit	US$76.67b
Other Expenses	US$60.18b
Earnings	US$16.49b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

Oct 14, 2022

Earnings per share (EPS)	4.35
Gross Margin	100.00%
Net Profit Margin	21.51%
Debt/Equity Ratio	113.7%

How did WFC perform over the long term?

See historical performance and comparison

Dividends

2.6%

Current Dividend Yield

21%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is WFC undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for WFC?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for WFC. This is calculated by dividing WFC's market cap by their current preferred multiple.
What is WFC's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$174.25b

WFC key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	n/a
Enterprise Value/EBITDA	n/a
PEG Ratio	0.7x

Price to Earnings Ratio vs Peers

How does WFC's PE Ratio compare to its peers?

WFC PE Ratio vs Peers

The above table shows the PE ratio for WFC vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	9.6x
BAC Bank of America	11x	9.1%	US$291.7b
C Citigroup	6.7x	0.4%	US$105.3b
JPM JPMorgan Chase	9.6x	6.5%	US$358.2b
USB U.S. Bancorp	11.2x	14.4%	US$72.5b
WFC Wells Fargo	10.6x	14.3%	US$174.3b

Price-To-Earnings vs Peers: WFC is expensive based on its Price-To-Earnings Ratio (10.6x) compared to the peer average (9.6x).

Price to Earnings Ratio vs Industry

How does WFC's PE Ratio compare vs other companies in the US Banks Industry?

Price-To-Earnings vs Industry: WFC is expensive based on its Price-To-Earnings Ratio (10.6x) compared to the US Banks industry average (10.1x)

Price to Earnings Ratio vs Fair Ratio

What is WFC's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

WFC PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	10.6x
Fair PE Ratio	18x

Price-To-Earnings vs Fair Ratio: WFC is good value based on its Price-To-Earnings Ratio (10.6x) compared to the estimated Fair Price-To-Earnings Ratio (18x).

Share Price vs Fair Value

What is the Fair Price of WFC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: WFC ($45.94) is trading below our estimate of fair value ($82.77)

Significantly Below Fair Value: WFC is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.

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Future Growth

How is Wells Fargo forecast to perform in the next 1 to 3 years based on estimates from 20 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

14.3%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: WFC's forecast earnings growth (14.3% per year) is above the savings rate (1.9%).

Earnings vs Market: WFC's earnings (14.3% per year) are forecast to grow slower than the US market (14.4% per year).

High Growth Earnings: WFC's earnings are forecast to grow, but not significantly.

Revenue vs Market: WFC's revenue (6.5% per year) is forecast to grow slower than the US market (7.9% per year).

High Growth Revenue: WFC's revenue (6.5% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: WFC's Return on Equity is forecast to be low in 3 years time (11.8%).

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Past Performance

How has Wells Fargo performed over the past 5 years?

Past Performance Score

3/6

Past Performance Score 3/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-11.2%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: WFC has high quality earnings.

Growing Profit Margin: WFC's current net profit margins (21.5%) are higher than last year (19.9%).

Past Earnings Growth Analysis

Earnings Trend: WFC's earnings have declined by 11.2% per year over the past 5 years.

Accelerating Growth: WFC's earnings growth over the past year (5.4%) exceeds its 5-year average (-11.2% per year).

Earnings vs Industry: WFC earnings growth over the past year (5.4%) underperformed the Banks industry 8.8%.

Return on Equity

High ROE: WFC's Return on Equity (10.3%) is considered low.

Discover strong past performing companies

Financial Health

How is Wells Fargo's financial position? (This company is analysed differently as a bank or financial institution)

Financial Health Score

6/6

Financial Health Score 6/6

Asset Level
Allowance for Bad Loans
Low Risk Liabilities
Loan Level
Low Risk Deposits
Level of Bad Loans

Financial Position Analysis

Debt to Equity History and Analysis

Balance Sheet

Financial Institutions Analysis

Asset Level: WFC's Assets to Equity ratio (10.5x) is moderate.

Allowance for Bad Loans: WFC has a sufficient allowance for bad loans (197%).

Low Risk Liabilities: 84% of WFC's liabilities are made up of primarily low risk sources of funding.

Loan Level: WFC has an appropriate level of Loans to Assets ratio (50%).

Low Risk Deposits: WFC's Loans to Deposits ratio (65%) is appropriate.

Level of Bad Loans: WFC has an appropriate level of bad loans (0.6%).

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Dividend

What is Wells Fargo current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

2.61%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: WFC's dividend (2.61%) is higher than the bottom 25% of dividend payers in the US market (1.47%).

High Dividend: WFC's dividend (2.61%) is low compared to the top 25% of dividend payers in the US market (3.96%).

Stability and Growth of Payments

Stable Dividend: WFC's dividend payments have been volatile in the past 10 years.

Growing Dividend: WFC's dividend payments have increased over the past 10 years.

Current Payout to Shareholders

Earnings Coverage: With its low payout ratio (21.3%), WFC's dividend payments are well covered by earnings.

Future Payout to Shareholders

Future Dividend Coverage: WFC's dividends in 3 years are forecast to be well covered by earnings (30.8% payout ratio).

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

2.6yrs

Average management tenure

CEO

Charlie Scharf (57 yo)

2.83yrs

Tenure

US$21,350,906

Compensation

Mr. Charles W. Scharf, also known as Charlie, has been the Chief Executive Officer, President and Director of Wells Fargo & Company since October 21, 2019. Mr. Scharf serves as Director of Visa Internation...

CEO Compensation Analysis

Compensation vs Market: Charlie's total compensation ($USD21.35M) is above average for companies of similar size in the US market ($USD12.88M).

Compensation vs Earnings: Charlie's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: WFC's management team is considered experienced (2.6 years average tenure).

Board Members

Experienced Board: WFC's board of directors are considered experienced (5.5 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/14 00:00
End of Day Share Price	2022/08/12 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31