It hasn’t been a good few weeks for Wells Fargo & Co. (WFC).
Last week, Wells Fargo was slapped with a $185 million fine — the largest penalty of its kind — for creating some two million unauthorized accounts.
According to the Consumer Financial Protection Bureau, Wells Fargo opened 1.5 million deposit and 565,000 credit accounts without its customers’ permission. The bank’s employees were then rewarded based on how many new accounts they opened. Wells Fargo also profited from annual fees and overdraft fees related to the unauthorized accounts.
This is particularly shocking because Wells Fargo is among the nation’s top money center banks.
WFC shares plunged on the news, and the company has been scrambling ever since with shares of WFC down nearly 10% in the last five trading days.
The bank revealed that it had fired a staggering 5,300 employees related to these fraudulent activities. Starting in calendar 2017, the firm will also eliminate the product sales goals that encouraged this behavior.
But is this enough to bring WFC back from the brink? I’m not convinced.
For the first time in over three years, Wells Fargo is no longer the country’s most valuable bank—that distinction goes to JPMorgan Chase & Co. (JPM). Wells Fargo is also in Congress’ crosshairs, and I wouldn’t be surprised to see more fines imposed on the bank.
And even before the scandal, Wells Fargo was struggling. For the current quarter, analysts are calling for a 2.9% year-on-year drop in earnings, and just 1.6% sales growth. This nonexistent growth is expected to last through year-end.
So it’s no surprise that WFC is poorly rated in Portfolio Grader. The stock earns a C for its fundamentals, and an F for its Quantitative Grade (which measures institutional buying pressure).
The bottom line is that I wouldn’t hold my breath for a big comeback from WFC any time soon.
More From InvestorPlace
- 9 Dividend Stocks That Have Written Checks Since the 1800s
- 3 Best Vanguard Funds to Hold Through 2020
- 7 Must-Own Tech Stocks With REAL Dividend Growth