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Wells Fargo (WFC)
NYSE:WFC
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Wells Fargo
(NYSE:WFC)
71Outperform
Positive Factors
Financial Performance
Higher investment advisory and investment banking fees and lower expenses boosted earnings.
Regulatory Progress
Regulators are recognizing fulfilled obligations, which is an important step forward for the company.
Shareholder Returns
DPS rose 14% YoY to US$0.40, and common stock net repurchases rose 67% YoY to US$4bn.
Negative Factors
Asset Cap
The removal of the Fed-imposed asset cap remains the most significant unresolved issue and potential positive catalyst ahead.
Core Financials
Core PPNR came in 9% below consensus due to lower core fee income and higher core expense.
Loan Growth
Commercial loan growth has been elusive, but WFC has had success growing card.
Wells Fargo (WFC) vs. S&P 500 (SPY)
Market Cap
$199.11B
Dividend Yield2.54%
Average Volume (3M)17.34M
Price to Earnings (P/E)11.4
Beta (1Y)1.06
Revenue Growth7.87%
EPS Growth11.69%
CountryUS
Employees217,000
SectorFinancial
Sector Strength81
IndustryBanks - Diversified
Share Statistics
EPS (TTM)5.37
Shares Outstanding3,265,159,000
10 Day Avg. Volume14,632,043
30 Day Avg. Volume17,341,932
Financial Highlights & Ratios
PEG Ratio0.97
Price to Book (P/B)N/A
Price to Sales (P/S)3.06
Price to Cash Flow (P/CF)6.70
P/FCF Ratio3.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$82.16Price Target Upside32.15% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering18
Wells Fargo Business Overview & Revenue Model
Company DescriptionWells 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. Its financial products and services include checking and savings accounts, and credit and debit cards, as well as home, auto, personal, and small business lending services. The Commercial Banking segment provides financial solutions to private, family owned, and certain public companies. Its products and services include banking and credit products across various industry sectors and municipalities, secured lending and lease products, and treasury management services. The Corporate and Investment Banking segment offers a suite of capital markets, banking, and financial products and services to corporate, commercial real estate, government, and institutional clients. Its products and services comprise corporate banking, investment banking, treasury management, commercial real estate lending and servicing, equity, and fixed income solutions, as well as sales, trading, and research capabilities services. The Wealth and Investment Management segment provides personalized wealth management, brokerage, financial planning, lending, private banking, and trust and fiduciary products and services to affluent, high-net worth, and ultra-high-net worth clients. It also operates through financial advisors. Wells Fargo & Company was founded in 1852 and is headquartered in San Francisco, California.
How the Company Makes MoneyWells Fargo generates revenue primarily through its interest and non-interest income channels. Interest income comes from loans and securities, where the company earns money by charging interest on loans provided to consumers and businesses, and from earning interest on various securities. Non-interest income is derived from fees and commissions related to deposit accounts, investment products, wealth management, and transaction services. Additionally, the company earns money from mortgage banking activities, including loan origination and servicing, as well as from investment banking and trading operations. Strategic partnerships, such as co-branded credit cards and financial technology collaborations, also contribute to its earnings. Furthermore, factors such as interest rate fluctuations, regulatory changes, and economic conditions significantly influence Wells Fargo's profitability.
Wells Fargo Financial Statement Overview
Summary
Wells Fargo exhibits strong profitability and revenue stability, supported by robust margins and improved leverage ratios. While the balance sheet indicates financial stability, the cash flow statement raises concerns about cash generation consistency. Continued focus on cash flow management and risk mitigation strategies would enhance overall financial health.Income Statement
Wells Fargo has shown a stable revenue base with a slight increase from $77.19 billion in 2023 to $77.96 billion in 2024. Despite a drop in total revenue from 2019, the company has improved its EBIT and net income margins over the years, indicating efficient cost management and profitability. The net profit margin improved to 25.3% in 2024, reflecting strong profitability. However, the lack of TTM data for certain metrics limits a comprehensive analysis.78
Positive
Balance Sheet
The balance sheet shows a strong equity base with stockholders' equity at $179.12 billion in 2024. The debt-to-equity ratio improved to 0.97 in 2024 from 1.18 in 2023, indicating reduced leverage. The equity ratio stands stable at around 9.3%, showing a consistent capital structure. However, the high total liabilities relative to assets present potential leverage risks.70
Positive
Cash Flow
Cash flow analysis reveals fluctuating free cash flow, with a significant drop in 2024. The free cash flow to net income ratio is unavailable due to zero free cash flow in 2024, indicating potential cash management issues. However, the company has previously demonstrated positive operating cash flows, suggesting resilience in operational cash generation.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 77.96B | 77.20B | 73.78B | 78.49B | 72.34B | Gross Profit |
| 77.96B | 82.60B | 73.78B | 78.49B | 72.34B | EBIT |
| 28.49B | 28.67B | 14.97B | 28.85B | 4.04B | EBITDA |
| 24.00B | 27.91B | 22.28B | 37.31B | 0.00 | Net Income Common Stockholders |
| 19.72B | 19.14B | 13.68B | 22.11B | 1.79B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 142.41B | 316.46B | 272.75B | 411.47B | 485.00B | Total Assets |
| 1.93T | 1.93T | 1.88T | 1.95T | 1.96T | Total Debt |
| 173.08B | 219.47B | 226.01B | 195.10B | 271.95B | Net Debt |
| 30.67B | -17.75B | 66.86B | -39.13B | 7.34B | Total Liabilities |
| 1.75T | 1.75T | 1.70T | 1.76T | 1.77T | Stockholders Equity |
| 179.12B | 185.74B | 179.89B | 187.61B | 184.89B |
| Cash Flow | Free Cash Flow | |||
| 3.04B | 40.36B | 27.05B | -11.53B | 2.05B | Operating Cash Flow |
| 3.04B | 40.36B | 27.05B | -11.53B | 2.05B | Investing Cash Flow |
| -15.65B | 16.04B | -42.48B | -7.62B | 122.55B | Financing Cash Flow |
| -21.53B | 20.49B | -59.65B | -11.24B | -1.24B |
Wells Fargo Technical Analysis
Negative
62.17
Price Trends
74.52
Negative
73.65
Negative
65.67
Negative
Market Momentum
-0.78
Negative
43.86
Neutral
27.36
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WFC, the sentiment is Negative. The current price of 62.17 is below the 20-day moving average (MA) of 70.22, below the 50-day MA of 74.52, and below the 200-day MA of 65.67, indicating a bearish trend. The MACD of -0.78 indicates Negative momentum. The RSI at 43.86 is Neutral, neither overbought nor oversold. The STOCH value of 27.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WFC.
Wells Fargo Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $171.97B | 7.98 | 13.74% | 6.58% | 6.79% | 8.57% | |
79 Outperform | $587.97B | 10.65 | 17.28% | 2.28% | 17.07% | 21.78% | |
71 Outperform | $199.11B | 11.36 | 10.81% | 2.54% | 7.87% | 11.69% | |
71 Outperform | $128.94B | 10.10 | 9.70% | 3.20% | 13.21% | -12.06% | |
70 Neutral | $261.52B | 10.70 | 9.24% | 2.96% | 13.06% | 4.94% | |
66 Neutral | $109.41B | 9.78 | 6.04% | 3.80% | 8.20% | 49.26% | |
63 Neutral | $12.88B | 9.21 | 9.18% | 4.78% | 16.30% | -8.66% |
* Financial Sector Average
Performance Comparison
WFC
Wells Fargo
62.17
5.96
10.60%
BAC
Bank of America
35.58
-1.24
-3.37%
C
Citigroup
58.85
-0.75
-1.26%
HSBC
HSBC Holdings
48.42
10.70
28.37%
JPM
JPMorgan Chase
214.44
21.76
11.29%
MUFG
Mitsubishi UFJ
10.82
0.98
9.96%
Wells Fargo Earnings Call Summary
Earnings Call Date: Jan 15, 2025 | % Change Since: -12.24% | Next Earnings Date: Apr 11, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance with significant capital returns and growth in strategic areas, offset by challenges in specific segments like home lending, auto, and commercial real estate. The company has successfully lowered expenses and improved efficiency, contributing to overall positive financial results.Highlights
Strong Financial Performance
Net income for the fourth quarter was $5.1 billion, or $1.43 per diluted common share, with a solid underlying business performance and growth in fee income across most categories.
Capital Return and Dividend Increase
Wells Fargo returned $25 billion of capital to shareholders and increased the common stock dividend per share by 15%. The company repurchased approximately $20 billion of common stock, up 64% from a year ago.
Progress in Credit Card Business
Over 2.4 million new credit card accounts were opened in 2024, with strong credit card spend up over $17 billion from a year ago.
Improved Efficiency and Lower Expenses
Noninterest expense declined 12% from a year ago, driven by lower FDIC expenses and efficiency initiatives resulting in headcount reductions every quarter since Q3 2020.
Investment in Strategic Growth Areas
Wells Fargo made significant investments in areas like technology, digital platforms, and customer growth initiatives, including hiring more bankers and financial advisers.
Lowlights
Decline in Home Lending and Auto Business
Auto revenue decreased 21% from a year ago due to lower loan balances and loan spread compression. The home lending business also faced challenges, though improvements were noted.
Mixed Performance in Corporate and Investment Banking
Revenue in the Corporate and Investment Banking segment was down 4% from a year ago due to higher deposit costs and lower loan balances, despite higher investment banking revenue.
Commercial Real Estate Challenges
Commercial real estate revenue decreased 1% from a year ago, reflecting lower loan balances and weak fundamentals in the office portfolio.
Credit Performance Pressures
Commercial net loan charge-offs increased due to commercial real estate office portfolio challenges, and there were higher losses in the consumer credit card portfolio.
Company Guidance
During the fourth quarter 2024 earnings call, Wells Fargo provided comprehensive guidance for 2025, highlighting several key metrics. The guidance anticipates a 1% to 3% increase in net interest income (NII) compared to 2024, with expectations of modest loan growth across commercial and consumer segments, particularly in the Corporate Investment Bank and credit card portfolios. The company plans to maintain noninterest expenses around $54.2 billion, despite $2.4 billion in expected efficiency savings, by increasing investments in technology and other strategic areas. Additionally, Wells Fargo aims to enhance its return on tangible common equity (ROTCE), which reached 13.4% in 2024, with a medium-term goal of achieving a sustainable 15%, driven by improved profitability in credit card and home lending businesses, as well as growth in wealth and investment management. The call emphasized a disciplined approach to managing expenses, credit quality, and investments, while also acknowledging the impact of macroeconomic factors such as interest rates and market conditions on their financial outlook.Wells Fargo Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Wells Fargo Announces Leadership Transition in CIB
Positive
Jan 30, 2025
On January 30, 2025, Wells Fargo announced the retirement of Jon Weiss, Co-CEO of Corporate & Investment Banking, effective June 1, 2025. Fernando Rivas, who joined the company in May 2024, will assume the role of sole CEO of Corporate & Investment Banking immediately. This leadership transition highlights Weiss’s significant contributions, including a 40% increase in net income and a 35% rise in revenue since he began leading CIB in 2020, positioning the business for future growth. The change is poised to further strengthen Wells Fargo’s position within the financial services industry.
Stock BuybackFinancial Disclosures
Wells Fargo Reports Strong Q4 and Annual Income
Positive
Jan 15, 2025
Wells Fargo reported a net income of $5.1 billion for the fourth quarter of 2024, with earnings of $1.43 per diluted share. The full-year net income for 2024 was $19.7 billion or $5.37 per diluted share. The company’s performance metrics showed improvement, with a reduction in noninterest expenses and a favorable change in net income and earnings per share compared to the previous year. The company also repurchased 57.8 million shares, valued at $4.0 billion, during the fourth quarter. Additionally, the financial results included discrete tax benefits and severance expenses related to prior period matters.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.