Wells Fargo ($WFC) Bank Stock is both Good Company & Price no ?
As we go about our daily lives, we are constantly making choices - either A or B etc...
Have we ever stopped in our tracks and think out of the box on whether there a possibility of a third choice eg. both (A & B).
Applying the same notion to the question posed, in investment can we not profit from a stock that is both good Company and good Price ?
If we try to make this our choice, falling short we would still have either condition as a fallback in reality no ? Think about it.
Going along with this proposition, then banking stock like Wells Fargo could be a valid illustration of good Company with good Price.
Perhaps take a look at their latest Q4 2022 as determinant ?
- An American multinational financial services company
- Has presence & operations in 35 countries with over 70 million customers globally
- It is considered an important financial institution by Internation Organization "Financial Stability Board" (after the Apr 2009's G20 London summit as a successor to the Financial Stability Forum).
- Ranked 4th largest bank in America by total asset
- It is also one of the largest as ranked by bank deposits and market capitalization
- It is one of the most valuable bank brands
- Total revenue fell -5.7% to $19.66 Billion (YoY basis) vs market expectations of $19.99 Billion. QoQ, total revenue gain 0.82% actually.
- Earnings per share fell -51% to $0.67 (YoY basis) vs market expectations of $0.60. QoQ, earnings per share fell -21.12%.
- Main reason for $Wells Fargo(WFC)$ 's earnings halved is due to its $3.7 Billion legal settlement with the Consumer Financial Protection Bureau (CFPB) over customer abuses tied to (a) improperly recording customer home loan payment, (b) improperly recording auto loan payments, (c) wrongfully repossessing borrowers' cars, (d) wrongfully repossessing borrowers' homes and (e) wrongfully charging overdraft fees..
- Without the legal expenses incurred, Wells Fargo would have a glowing report card to present to shareholders.
$WFC - Total revenue contributing department
- Above is a more detailed breakdown of $WFC's revenue source
- On 10 Jan 2023, WFC announced plans to shrink its mortgage business; drastically.
- It will offer home loans to existing bank & wealth management customers, as well as borrowers in minority communities only.
- The bank is also closing its correspondence business, which sells mortgages through third parties, and "significantly" reducing its mortgage servicing portfolio through asset sales.
- Wells Fargo is the largest mortgage servicer in the U.S. with nearly $1 trillion in loans, or 7.3% of the market, as of Q3 2022, CNBC reported.
$WFC - other important details
- Well Fargo's net interest income has increased by +44% to $13.4 Billion (YoY). QoQ, net interest income has increased by +11.67%.
- Similarly, non-interest income fell by -46.55% to $6.2 Billion (YoY). QoQ, non-interest income has fell -16.22%.
$WFC - other details
Wells Fargo CEO Comments on Q4 2022 Results
We continue to invest in the future. This past year, we enhanced our digital & mobile capabilities to better serve our customers and launched innovative products & solutions - including a new smaller dollar product - Flex Loan, 2 credit cards and a new digital banking platform for our commercial clients. We have also made significant changes that helped millions of customers avoid overdraft fees..... CEO, Charlie Scharf ....
Why Wells Fargo Is Both A Good Company and A Good Price ?
- Banking stocks are non-cyclical in nature unlike semiconductors (for example).
- With interest rates forecasted to continue rising to the 5% terminal rate banding means more revenue "potentially" to be earned by US financial institutions
- With a generous annual dividend of $1.20 per share (2.71% to current stock price), what is there not to like. $Meta Platforms, Inc.(META)$ - No dividends. $Tesla Motors(TSLA)$ - No dividends. $Apple(AAPL)$ - $0.92 per share annually.
- Do you agree that a third option is well warranted ?
- Do you agree that Wells Fargo is both a Good company and a Good Price (casting aside the legal settlement) ?
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