From other sites
at Zacks.com (Fri, 4:55PM)
at CNBC.com (Fri, 4:35PM)
Bank Stock Roundup: Fines, Legal Issues Rule Headlines; Citi, BofA & JPMorgan in Focus - Analyst Blogat Zacks.com (Fri, 2:47PM)
at CNBC.com (Fri, 1:15PM)
at Zacks.com (Fri, 11:30AM)
at Nasdaq.com (Thu, 12:16PM)
at Benzinga.com (Wed, 4:28PM)
at CNBC.com (Wed, 3:38PM)
at Zacks.com (Wed, 11:10AM)
at CNBC.com (Wed, 8:00AM)
- The bank continues to beat the broader market since mid-July.
- The stock seems to be undervalued when compared to 2015 earnings estimates, but those estimates have been cut since the last time I looked at the stock.
- There is a bit more risk than reward in the name right now as it appears to be in overbought territory.
Wells Fargo Still Offers Investors A Very Attractive Risk/Reward Ratio
- Wells Fargo makes an attractive value proposition for long-term investors.
- The bank's leading position in mortgage banking should serve Wells Fargo well as the housing market rebounds and demand for mortgages increases.
- High past profitability measures and improving efficiency ratios limit investors' downside risks.
- Despite a high P/B ratio of 1.73x, Wells Fargo is not too expensive yet.
Wells Fargo Is An Attractive Income Investment In The Financial Industry
- Wells Fargo has performed well over the last several years, even during the financial crisis.
- Wells Fargo has industry-leading fundamentals.
- Wells Fargo offers a high initial yield, high dividend growth and a low payout ratio.
- Wells Fargo has the lowest EV/EBITDA ratio among its peers and trades at a substantial discount to its intrinsic value.
Why Investors Should Choose Royal Bank Over Wells Fargo
- Royal Bank and Wells Fargo have comparable business, although the American bank is nearly three times larger than Canada's biggest bank by market capitalization.
- Wells Fargo has a slightly more flexible balance sheet than Royal, but trades at a higher forward earnings multiple.
- Royal Bank did not cut its dividend during the financial crisis and its current quarterly payout is 50% higher than it was in 2007-2008.
- Based on a similar earnings growth outlook for both of these companies, Royal Bank appears to be the better opportunity due to its lower valuation and higher dividend yield.
- WFC is suitable for both the Defensive Investor and the Enterprising Investor following the ModernGraham approach.
- According to the ModernGraham valuation model, the company is significantly undervalued at the present time.
- The market is implying 3.19% earnings growth over the next 7-10 years, which is significantly less than the rate the company has seen in recent years.
Shrinking Interest Margins Weigh On Wells Fargo's Q3 Results
- Q3 saw a drop in interest rate margin of 9 basis points. However financial results continued to be impressive despite falling interest rate margins.
- Interest income increased, largely through effective dilution.
- Wells Fargo passed the Reserve Bank’s stress test and demonstrated its ability to wither future economic storms.
- It presented opportunity for dividend investors through strong capital position and effective risk management approach.
- Capital gain seeking investors may also reap rewards through share repurchases.
Wells Fargo - Solid Results, But What Can Drive Appeal Further?
- Wells Fargo posts results which are in line with expectations.
- The report shows continued weakness in the housing market and potentially emerging issues in the automotive market.
- I remain cautious despite the fair valuation and the appealing dividend yield, seeing a lack of further triggers.
Does The Wells Fargo Whisper Number Indicate Investor Confidence?
- The whisper number is $1.02, in-line with the analysts' estimate.
- Wells Fargo has a 40% positive surprise history (having topped the whisper in 16 of the 40 earnings reports for which we have data).
- The overall average post earnings price move is 'positive' (beat the whisper number and see strength, miss and see strength) when the company reports earnings.
- Wells Fargo & Company is scheduled to report 3Q 2014 earnings before the opening bell on Tuesday, October 14th.
- Earnings Per Share: The current Street estimate is $1.02 (range $0.95 to $1.05).
- Revenues: Analysts expect an increase of 3.0% y/y to $21.08 billion (range $20.74 billion to $21.53 billion).
Why Wells Fargo Is Going Higher: 5-Year Forward Price Target Of $85
- With great prospects for future growth given Wells Fargo's strong position in the commercial banking sector, I believe the stock is a buy even at the current price.
- Having met, and in most cases beaten earnings estimates for the past 11 quarters running, I believe Wells Fargo can achieve 20% annual EPS growth for the next five years.
- I forecast a price target of $85 based on a 7% discount rate, and 20% growth in earnings and dividends per share.
- Wells Fargo bank has best share price gain over the past ten years among other leading US banks.
- It is the country's market leader in mortgage origination and provides banking services to one-third of US households.
- Several key metrics for profitability and efficiency show Wells Fargo is a leading bank among its peers.
Wells Fargo: Should You Still Buy Wells Fargo Close To Its 52-Week High?
- Wells Fargo is one of the best run Wall Street banks with strong earnings momentum and dividend growth.
- Wells Fargo also managed so far to stay out of trouble with the Department of Justice, which kept caused some troubles for Citigroup and Bank of America shareholders.
- At 1.72x book value and close to its 52-week high, is Wells Fargo a Buy, Hold or Sell?
- First, we'll go over the terms of the warrants, including strike price, expiration date, and adjustment terms.
- Next we'll try to find a reasonable forward valuation for Wells Fargo common stock through 2018.
- Lastly, we'll compare the returns of the warrants to the returns of the common stock.
How Will The Housing Market Impact Wells Fargo Going Forward?
- Based on economic growth rates, restricted supply, and steadily rising house prices, I am optimistic about Wells Fargo's exposure to the sector.
- Wells Fargo is in a good position to weather any potential downturns in the housing market, with almost half of its revenues originating from non-interest income.
- The bank's performance across its Community Banking, Wholesale Banking, and Wealth, Brokerage and Retirement functions places Wells Fargo as one of the leading consumer banks in the United States.
- WFC's stock is an excellent combination of value and dividend growth stock.
- WFC's stock still has plenty of room to move up.
- WFC's stock is ranked third among all S&P 500 stocks yielding more than 2%, according to Portfolio123’s "All-Stars: Graham" powerful ranking system.
Wells Fargo Offers An Attractive Combination Of Dividends And Capital Gains.
- Wells Fargo continues to perform well as evidenced by its stellar Return on Assets.
- WFC consistently trades a premium to book value due to its high returns.
- I expect WFC book value and dividend rate to consistently grow over the next couple of years.
- Wells Fargo shares have doubled in the past two years.
- The company's decent dividend has room to expand through increased earnings and a higher payout ratio.
- What do total returns look like over the short and medium terms?
- We pitch two companies from the banking sector, Wells Fargo and BB&T, against one another in the latest instalment of our Head-To-Head series.
- The article focuses on the relative strengths and weaknesses of Wells Fargo and BB&T based on business performance and dividends/forecasts.
- It ends with discussion of the current valuations of the two companies, and details whether Wells Fargo represents good relative value at current price levels.
- We chose to compare Wells Fargo and BB&T because of their similar yields, but markedly different recent financial performance.
Tue, May. 20, 12:05 PM
- The bank is targeting a payout ratio of 55-75% vs. a previous range of 50-65%. The efficiency ratio remains in the 55-59% range, as does ROE of 12-15%, and ROA of 1.3-1.6%.
- CFO John Shrewsberry's presentation slides
- More from Shrewsberry: Expect loan growth to continue at a faster pace than GDP growth, the bank is well-positioned for rising rates, mortgage production revenue should stabilize and WFC is well-positioned for non-mortgage fee growth, and strong credit results (and reserve releases) should continue.
- All presentations and webast
Fri, May. 16, 7:21 AM
- Wells Fargo (WFC) opened an office in Aberdeen this week, hoping to get a piece of Scotland's east coast oil business as part of its U.K. expansion. The bank now has 930 people in EMEA, up from 600 at the start of 2012. Of those 930, 721 are in the U.K.
- The bank doesn't break out European earnings, but EMEA chief Jim Johnston says revenues have grown by at least 10% in each of the past three years.
Wed, May. 14, 10:17 AM
- Among those started at Buy is M&T Bank (MTB -0.9%), with analyst Bill Carcache noting the usually strong performer has lagged over the past 16 months amid regulatory issues and the delay of the Hudson City Bancorp (HCBK -1%) acquisition. Carcache expects approval this year, along with meaningful operating efficiency improvements. "We believe MTB shares are trading at a significant discount to their intrinsic value and expect to see meaningful share price appreciation through 2015."
- Also a Buy is Wells Fargo (WFC -0.8%), with Carcache seeing the bank as well-positioned if the economic recovery remains muted thanks to a combination of fee income and expense control.
- Started at Reduce with $40 price target is Comerica (CMA -1.7%), with Carcache saying the stock price has gotten ahead of itself.
- See also: More on Nomura's wide-ranging new bank coverage
Fri, May. 9, 3:26 PM
- “Jumbos are growing while almost everything else is dead,” says FBR's Paul Miller. “Big banks need loan growth. If they were getting decent commercial loan growth, they wouldn’t be so aggressive on competing for jumbos.”
- As the rest of the home loan market contracts (sharply), applications for jumbo mortgages (above $729K) were up 4.9% Y/Y in March. Another reason for banks plowing into jumbos: They don't have to pay the higher guarantee fees charged by the GSEs, allowing them to actually charge lower rates than on conforming loans. At Wells Fargo (WFC), the current rate for a 30-year fixed jumbo mortgage of 4.13% is 12 basis points less than that for a conventional mortgage loan.
- JPMorgan (JPM) is boosting its efforts and created a special process to review all declined loans to make sure the decisions make sense. It also has a group working with wealthier clients who have more complex financial situations, such as being self-employed. The bank's jumbo mortgage originations accounted for 21% of all mortgages in Q1, up from 10% a year earlier.
- At Bank of America (BAC -1.7%) the down payment required for most jumbos less than $1M was cut this year to 15% from 20%, and nonconforming originations in Q1 were 37% of all mortgages vs. 22% last year.
Thu, May. 8, 3:15 PM
- The Fed today releases for comment a proposed rule prohibiting a financial company from merging with another if their combination's liabilities would exceed 10% of the total of all financial companies.
- The move is another step in implementing the intent of the Dodd-Frank financial reform act. Comments are due by July 8.
- Only JPMorgan (JPM +0.5%), Bank of America (BAC +0.6%), Citigroup (C +0.7%), and Wells Fargo (WFC -0.2%) would be affected - at least in the short term - says the Financial Stability Oversight Council.
Tue, May. 6, 10:02 AM
- In an effort to lure more wealthy customers, Wells Fargo (WFC -0.6%) - through a partnership with American Express (AXP -0.7%) - is launching two new cards offering rewards to big everyday spenders or frequent fliers who also have another account with the bank. The new cards - Propel 365 and Propel World - offer up to an extra 50% in reward points depending on the size of a customer's accounts.
- Just 3% of consumers who charge more than $100K annually on their credit cards do it through a Wells Fargo product, according to a recent Wells presentation. At JPMorgan's February investor day, a slide showing what cards affluent customers choose didn't include Wells Fargo on the page. "We know we're under-penetrated in this customer base," says Beverly Anderson, the head of Wells' consumer financial services group.
Mon, May. 5, 10:20 AM
- A check of the global banks finds the group pacing market declines in morning action after Friday night's warning on Q2 trading revenue from JPMorgan (JPM -2.2%).
- Nomura's Steven Chubak is first out with lower JPMorgan earnings estimates.
- Jim Cramer sums up sentiment: "This has been a house of pain. You can't own these right now. You just can't."
- Morgan Stanley (MS -1.9%), Goldman Sachs (GS -1.5%), Citigroup (C -1.2%), and Bank of America (BAC -1%), Deutsche Bank (DB -1.2%). Far less trading dependent than the other Too Big Too Fails is Wells Fargo (WFC -0.2%).
- The iShares DJ U.S. Broker-Dealer ETF (IAI -1.2%)
- XLF -0.7%, KBE -0.8%
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, IAI, SEF, IYG, PFI, FXO, FNCL, KBWB, FINU, KCE, RWW, RYF, PSCF, FINZ, KBWC
Fri, May. 2, 3:42 AM
- Goldman Sachs (GS) and Morgan Stanley (MS) are on a Fed list of 15 U.S. and foreign financial firms that "may pose elevated risks to U.S. financial stability" and so will receive extra supervision by a cross-disciplinary special unit called the Large Institution Supervision Coordinating Committee.
- Other firms on the list include JPMorgan (JPM), Bank of America (BAC), AIG (AIG), GE (GE), Citigroup (C), Wells Fargo (WFC), State Street (STT), Prudential Financial (PRU), Barclays (BCS), Credit Suisse (CS), Deutsche Bank (DB) and UBS (UBS).
- As a major clearing and custody bank, Bank of New York Mellon (BK), will also receive the extra attention.
Tue, Apr. 29, 4:10 PM
Fri, Apr. 25, 9:43 AM| Comment!
Wed, Apr. 23, 3:13 PM
- Jonathan Weiss - currently co-head of investment banking and capital markets - is promoted to run the bank's securities unit, effective May 15. He'll replace John Shrewsberry, who's taking over the CFO slot from Tim Sloan who will be running WFC's wholesale-banking unit. Weiss' report will be Sloan.
- Weiss' investment banking co-head Robert Engel will lead the unit on his own following the move.
- Source: Press Release
- Previous: Management shuffle at Wells Fargo
Wed, Apr. 23, 2:45 PM
- BNY Mellon (BK +2.1%) has hired Goldman Sachs to find a buyer for the unit, reports Bloomberg, and is expected to begin receiving offers in about a month. The corporate trust arm assists companies with making payments on debt they issue as well as helping customers recover funds in event of default.
- The business services about $12T in outstanding debt, with 3.5K employees at 61 global offices, but has become less lucrative since the financial crisis made the packaging and selling of loans a more difficult business. Possible buyers could be large commercial banks looking to build out their own trust business such as Bank of America (BAC), U.S. Bancorp (USB), Wells Fargo (WFC), or PNC Financial, says Guggenheim's Marty Mosby.
- On a recent earnings call, BNY management said run-off in the unit would cut annual revenue by $50M-$75M annually, roughly 0.5% of total bank revenue.
Mon, Apr. 21, 10:17 AM
- A federal judge will allow Wells Fargo's (WFC +0.7%) dreaded foreclosure manual into evidence in the bankruptcy case of a former homeowner. The homeowner's lawyer alleges the manual is "a blueprint for fraud," and contains step-by-step instructions for - among other things - processing notes without endorsements.
- Previous coverage
- In other news, the D.C. revolving door brings two former CFPB officials closely involved with writing new mortgage rules into the bank's employ. Peter Carroll - the CFPB's assistant director of mortgage markets - is now senior VP of capital markets at Wells Fargo Home Mortgages, and Lisa Applegate - the bureau's mortgage-implementation lead - will start later this month as a strategic quality manager within the bank's home lending capital markets group.
Fri, Apr. 11, 10:52 AM
- Overall traffic to branches was strong in Q1 despite the brutal winter weather (JPM's CFO notably blamed the weather for having a role in its weak Q), says Wells Fargo (WFC +2%) CFO Tim Sloan on the earnings call (his last as CFO). The refinance boom now a bust, Sloan expects a strong purchase market to drive originations growth in Q2. Also commenting on housing/mortgages, CEO John Stumpf notes the number of those buying homes for cash is up.
- As for acquisitions, management says Wells is in a position to do a big one, but is going to be picky.
- Wells sits alone among the TBTF banks in the green in morning action. XLF -0.5%, KBE -0.35%
- Earnings call presentation
- Previous earnings coverage
Fri, Apr. 11, 8:19 AM
- Revenue of $20.6B fell from $21.3B a year ago. Net interest income of $10.6B fell $188M from Q4, with net interest margin of 3.2% off 7 bps. Noninterest income of $10B up $100M from Q4. Noninterest expense of $11.9B fell $137M Q/Q, $452M from a year ago. Efficiency ratio of 57.9% up 40 bps.
- Net income in Community Banking of $3.8B rose 31% Y/Y on revenue of $12.6B which fell 2% (lower mortgage action). Noninterest expense of $6.8B fell 8%, thanks, in part, to job cuts in mortgages.
- Wholesale Banking net income of $1.7B fell 15% from a year ago on revenue of $5.6B, off 8%.
- Wealth, Brokerage, and Retirement net income of $475M rose 41% from a year ago on revenue of $3.5B, up 8%.
- Common Equity Tier 1 ratio under Basel III of 11.36%.
- CC at 10 ET
- Press release, Q1 results
- WFC +0.5% premarket
Fri, Apr. 11, 8:05 AM
WFC vs. ETF Alternatives
Wells Fargo & Co is a diversified financial services company. It provides retail, corporate and commercial banking services through banking stores and offices, the internet and other distribution channels to individuals, businesses and institutions.
Other News & PR