About a month ago, three big banks reported earnings, and the three earnings reports each told a different story.

JPMorgan Chase (NYSE:JPM) reported great numbers which pointed to strengthening fundamentals. Citigroup (NYSE:C) reported decent numbers which pointed to stagnating fundamentals. And Wells Fargo (NYSE:WFC) reported ugly numbers which pointed to weakening fundamentals.

Not surprisingly, over the past three years, JPM stock is up nearly 70%, and C stock is up more than 20%. WFC stock, meanwhile, is up just 2%.

It looks like this trend of WFC stock underperforming bank peers will persist. The company remains plagued by scandals, bad PR, and fines, the sum of which are causing a deterioration in operating results. Meanwhile, despite the company’s operational underperformance, WFC stock isn’t that cheap relative to historical standards or relative to other bank stocks.

Plus, the whole backdrop for bank stocks isn’t all that great today, with the 10-2 Treasury Yield spread narrowing and the 10-year Treasury Yield stagnating in the 2.8% to 3% range.

Altogether, I don’t see any reason to own WFC stock here and now. If you think bank fundamentals will improve, then yes, WFC stock will head higher. But, WFC stock’s premium valuation relative to peers means that it could underperform if the financials rally. Thus, even if you want to play a rebound in financials, WFC stock is not the way to do it.

Wells Fargo Remains Troubled

The company’s most recent quarterly numbers, reported last month, illustrated that Wells Fargo’s operations remain pressured by recent scandals.

Both revenue and profit were down everywhere at Wells Fargo, including in the Community Banking, Corporate and Wholesale Banking, and Wealth Management divisions.

Average loans fell. Average deposits fell. Mortgage banking fees, stung by anemic refinancing, dropped 33%. Expenses were up. And net interest income, which was supposed to get a big boost from higher rates, rose only 1%, versus a 9% gain at JPM in the overlapping period.

In other words, the numbers point to the fact that Wells Fargo, while still a powerful banking institution with long-term staying power, is working through a laundry list of scandals that date back to 2016 when it was discovered that bank employees were creating fake accounts to meet sales targets. Since then, the scandal list has only gotten longer, and WFC’s headaches have only grown.

There is the bull argument that these problems are all backward looking, and that going forward, operations should improve. But, The Wall Street Journal just reported that the same issues that plagued the company’s retail bank operations are also plaguing the company’s wealth management business (lofty sales targets coercing advisers to push clients into products with higher fees).

Thus, I’m not so sure that the scandals that have plagued WFC stock since 2016 are entirely behind the company. Moreover, with the 10-year Treasury Yield stagnating in the 2.8% to 3% range and the 10-2 Treasury Yield spread narrowing to its lowest levels of 2018, macro banking fundamentals aren’t terribly strong, either.

Big picture, I think Wells Fargo is a troubled company operating against a weak financials backdrop. That doesn’t make WFC stock a buy. Unless, valuation is compelling.

Valuation Isn’t Attractive

The bigger problem with WFC stock is that the valuation isn’t compelling at present levels.

The dividend yield is 2.8%. That is roughly in line with historical standards. Over the past three years, the time to buy WFC stock is when the yield jumped above 3%. We aren’t there yet.

WFC stock’s price/book multiple is 1.6, also in line with historical standards. Historically speaking, the time to buy WFC stock is when that multiple is below 1.5, and closer toward 1.4. Again, we aren’t there yet.

Moreover, WFC stock is actually more expensive on a forward earnings basis than peers JPM and C. WFC stock trades at 13X forward earnings, bigger than JPM stock’s 12X forward multiple and C’s 11X forward multiple.

Big picture, WFC stock isn’t all that cheap relative to historical standards, nor is it cheap relative to better-performing peer bank stocks. Thus, the valuation at current levels isn’t all that compelling.

Bottom Line on WFC Stock

The story remains troubled. The numbers remain weak. And, the valuation isn’t cheap.

For those three reasons, I don’t think there is any reason to own WFC stock over peer bank stocks like JPM or C.

As of this writing, Luke Lango was long JPM.