The recent market volatility has taken Wells Fargo & Co (WFC) down a peg.
However, now that Wells Fargo has just released seemingly solid fourth-quarter results, is now a good time to buy WFC shares? Let’s take closer look.
Wells Fargo – Company Overview
When counting assets, Wells Fargo is the fourth-largest bank in the country.
WFC operates in three segments: Community Banking; Wholesale Banking; and Wealth, Brokerage and Retirement. The Community Banking segment offers deposits, including checking, market rate and individual retirement accounts; savings and time deposits; and debit cards.
Wells Fargo’s loan products comprise lines of credit, auto floor plans, equity lines and loans, equipment and transportation loans, education loans, residential mortgage loans, health savings accounts and credit cards.
The WFC loan segment also provides equipment leases, real estate financing, small business administration financing, venture capital financing, cash management, payroll services, retirement plans, loans secured by autos and merchant payment processing services; purchases sales finance contracts from retail merchants; and a family of funds and investment management services.
WFC stock currently has a dividend yield of 2.77%.
Wells Fargo – Earnings Outlook
For the fourth quarter, Wells Fargo reported a net income of $5.38 billion, or $1.02 per share, which represented a 2% increase from the same quarter last year and met consensus expectations.
WFC stock’s revenue for the quarter also increased 1% to $21.44 billion, beating analysts’ estimates of $21.23 billion. Net income for the quarter jumped 3% to $11.18 billion. For fiscal year 2014, Wells Fargo net income edged up to $21.82 billion, or $4.10 per share, and revenue grew 1% to $84.35 billion.
All-in-all, these were solid results for WFC stock. However, given some of the underlying fundamental problems with WFC stock, it’s too soon to tell whether this will firm up Wells Fargo’s Fundamental Grade.
Wells Fargo – Current Ratings
Wells Fargo is considered a winner for long-term investors. Wells Fargo has been rated a “buy” for 11 of the past 12 months, which is predominantly because WFC has benefited from solid buying pressure. Wells Fargo earns a B for its Quantitative Grade.
At the same time, Wells Fargo’s fundamentals could use some improvement. WFC stock earns C-grades for earnings growth, earnings momentum and analyst earnings revisions, while earnings surprises and sales growth earn D-grades. The fundamental highlights are an impressive (A) grade for cash flow, operational margin growth (B) and return on equity (B). Overall, WFC receives a C for its Fundamental Grade.
As of this posting, Jan. 15, I consider WFC stock a B-rated “(cautious) buy.”
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
