Let’s be honest: Wells Fargo (NYSE:WFC) hasn’t always had a perfect reputation. If you’re going to invest in WFC stock, you’ll definitely want to be aware of the company’s spotty past.
This includes getting slapped with fines from U.S. regulators for allegedly creating 1.5 million fake deposit accounts and more than 500,000 fake credit cards.
Those accounts and cards were all issued in customers’ names without their permission, according to the allegations. It was an ugly chapter in the bank’s history. And now, Wells Fargo is embroiled in a development that, although not quite as shady, is still frustrating to some customers.
On the other hand, Wells Fargo’s investors might be willing to forgive and forget after they’ve seen the bank’s recent financial results.
A Closer Look at WFC Stock
Speaking of the share price, let’s talk about one of the stock’s resistance levels that’s been in effect for quite a long time.
On six different occasions, the bulls made unsuccessful efforts to reach $60. Those attempts were carried out twice in 2015 and then once during every year from 2016 through 2019.
Then came the onset of the Covid-19 pandemic in 2020, and $60 was off the table for awhile. However, after a powerful rebound by WFC stock, that $60 resistance point isn’t too far away.
This afternoon, the shares are changing hands for just over $45. The stock has been going sideways since April. However, it might just be forming a base ahead of a major move higher.
Notably, Wells Fargo’s trailing 12-month price-earnings ratio is just under 13. This signals that the shares are a bargain and should make the stock attractive to value-focused investors.
Meanwhile, WFC stock provides a forward annual dividend yield of 0.90%. That might not sound spectacular. Still, it’s a nice little bonus for income seekers.
Good-Bye, Credit Lines
If Wells Fargo is trying to curry favor with its customers, this probably isn’t the best move to make.
Reportedly, the company is closing down all existing personal lines of credit. Typically, these loan products allow users to borrow $3,000-$100,000.
For some banking clients, these loans may have served as a financial lifeline. After all, the Covid-19 pandemic has created financial hardships for many people.
As if all of this isn’t bad enough, Wells Fargo also revealed that the account closures “may have an impact on your credit score.”
Of course, we can reasonably assume that the “impact” will be negative.
If Wells Fargo is serious about restoring its reputation, then this might not be the best public-relations move to make right now.
Senator Elizabeth Warren took the opportunity to berate the big bank, tweeting, “Not a single @WellsFargo customer should see their credit score suffer just because their bank is restructuring after years of scams and incompetence.”
Keeping the Shareholders Happy
While the bank might anger some of its customers, at least Wells Fargo should be able to assuage its investors.
That’s because Wells Fargo recently released its second-quarter results, and the numbers aren’t too bad at all.
Analysts, on average, were bracing for earnings per share of 98 cents and revenues of $17.77 billion.
The owners of WFC stock should be glad to know that Wells Fargo posted EPS of $1.38, easily beating the mean estimate.
Not only that, but the bank reported quarterly revenues of $20.3 billion, representing an 11% year-over-year improvement and surpassing analysts’ average estimate.
CEO Charles Scharf cited “the continued economic recovery, strong markets that helped drive gains in our affiliated venture capital businesses, and our progress on improving efficiency” as contributing factors to Wells Fargo’s impressive performance.
The Bottom Line
So is Wells Fargo scandalous or fabulous?
The answer depends on your perspective. The bank’s clients might not always appreciate Wells Fargo’s policies and practices.
Its shareholders, however, can find reasons to like Wells Fargo now.
So maybe its shareholders can just hold their noses and hang onto their shares – and hope that the $60 barrier will be broken in due time.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.