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Category: Wells Fargo (WFC)
Date: 14 April 2021 Stock price of Wells Fargo (WFC): $41.80 Market Capital of Wells Fargo (WFC): $172.6 billion We take a look at the 1st quarter 2021 earnings report of Wells Fargo, one of the leading financial services companies that serves one in three U.S households. For the quarter the group reported revenues of $18.1 billion and net income of $4.72 billion.
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Chief Executive Officer Charlie Scharf - Our results for the quarter, which included a $1.6 billion pre-tax reduction in the allowance for credit losses, reflected an improving U.S. economy, continued focus on our strategic priorities, and ongoing support for our customers and our communities"
More About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a leading financial services company that has approximately $1.9 trillion in assets and proudly serves one in three U.S. households and more than 10% of all middle market companies in the U.S. We provide a diversified set of banking, investment and mortgage products and services, as well as consumer and commercial finance, through our four reportable operating segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management. Wells Fargo ranked No. 30 on Fortune’s 2020 rankings of America’s largest corporations. In the communities we serve, the company focuses its social impact on building a sustainable, inclusive future for all by supporting housing affordability, small business growth, financial health and a lowcarbon economy.
Overview of Wells Fargo 1st quarter 2021 earnings report
Consumer Banking and Lending
◦ Average loans of $353.1 billion, down 8%
◦ Average deposits of $789.4 billion, up 21%
Commercial Banking
◦ Average loans of $183.1 billion, down 19%
◦ Average deposits of $208.0 billion, up 8%
Corporate and Investment Banking
◦ Average loans of $246.1 billion, down 5%
◦ Average trading-related assets of $197.4 billion, down 14%
◦ Average deposits of $194.5 billion, down 27%
Wealth and Investment Management
◦ Total client assets of $2.1 trillion, up 28%
◦ Average loans of $80.8 billion, up 4%
◦ Average deposits of $173.7 billion, up 19%
Capital
◦ Repurchased 17.2 million shares, or $596 million, of common stock in first quarter 2021
First quarter 2021 results included:
◦ $1.6 billion, or $0.28 per share, decrease in the allowance for credit losses
◦ $208 million gain on the sale of student loans and $104 million write-down of related goodwill (net impact of $0.02 per share)
◦ Average loans of $353.1 billion, down 8%
◦ Average deposits of $789.4 billion, up 21%
Commercial Banking
◦ Average loans of $183.1 billion, down 19%
◦ Average deposits of $208.0 billion, up 8%
Corporate and Investment Banking
◦ Average loans of $246.1 billion, down 5%
◦ Average trading-related assets of $197.4 billion, down 14%
◦ Average deposits of $194.5 billion, down 27%
Wealth and Investment Management
◦ Total client assets of $2.1 trillion, up 28%
◦ Average loans of $80.8 billion, up 4%
◦ Average deposits of $173.7 billion, up 19%
Capital
◦ Repurchased 17.2 million shares, or $596 million, of common stock in first quarter 2021
First quarter 2021 results included:
◦ $1.6 billion, or $0.28 per share, decrease in the allowance for credit losses
◦ $208 million gain on the sale of student loans and $104 million write-down of related goodwill (net impact of $0.02 per share)
Wells Fargo management commentary on their 1st quarter 2021 earnings report
Chief Executive Officer Charlie Scharf commented on the quarter, “Our results for the quarter, which included a $1.6 billion pre-tax reduction in the allowance for credit losses, reflected an improving U.S. economy, continued focus on our strategic priorities, and ongoing support for our customers and our communities. Charge-offs are at historic lows and we are making changes to improve our operations and efficiency, but low interest rates and tepid loan demand continued to be a headwind for us in the quarter.”
“We are keenly focused on the priorities I outlined last quarter. Our work to build the appropriate risk and control environment remains our top priority. This is a multiyear effort and there is still much to do, but I am confident we are making progress, though it is not always a straight line. We are steadfast in our commitment to do this work which should ultimately satisfy our regulatory obligations,”
Scharf added. “We are also moving forward with our commitment to simplify the company and focus our resources on our core customers. We announced sales of our Asset Management and Corporate Trust businesses in the quarter and we are increasing resources dedicated to initiatives to help drive growth in our core franchises,” Scharf continued. “We have asked so much of the entire Wells Fargo team and I am proud of all the work they have done to support our customers and the communities we serve. We will continue to do all we can to support an equitable recovery and work to help those most in need of our support,” Scharf concluded
“We are keenly focused on the priorities I outlined last quarter. Our work to build the appropriate risk and control environment remains our top priority. This is a multiyear effort and there is still much to do, but I am confident we are making progress, though it is not always a straight line. We are steadfast in our commitment to do this work which should ultimately satisfy our regulatory obligations,”
Scharf added. “We are also moving forward with our commitment to simplify the company and focus our resources on our core customers. We announced sales of our Asset Management and Corporate Trust businesses in the quarter and we are increasing resources dedicated to initiatives to help drive growth in our core franchises,” Scharf continued. “We have asked so much of the entire Wells Fargo team and I am proud of all the work they have done to support our customers and the communities we serve. We will continue to do all we can to support an equitable recovery and work to help those most in need of our support,” Scharf concluded
Wells Fargo (WFC) stock price chart over the last 5 years
The image below shows the stock price history of Wells Fargo (WFC) over the last 5 years. And its not been a good time for Wells Fargo stockholders with the stock increasing by a mere 4.2% over the last 5 years. Not the type of returns investors would like to see consider the strong market performance in recent years.
The stock of Wells Fargo is trading at closer to its 52 week low than it is to its 52 week high which is an indication to us that the short term sentiment and momentum of Wells Fargo's stock is negative at this point in time.
The stock of Wells Fargo is trading at closer to its 52 week low than it is to its 52 week high which is an indication to us that the short term sentiment and momentum of Wells Fargo's stock is negative at this point in time.
Wells Fargo (WFC) vs Bank of America (BAC) vs Citi (C) stock price chart over last 5 years
The image below shows the stock price performance of Wells Fargo (WFC) compared to Citi (C) and Bank of America. The summary below shows the stock performance of each of these three firms over the last 5 years:
The stock of Bank of America has easily outperformed that of Wells Fargo and Citi over the last 5 years.
- Bank of America (BAC): 179.6%
- CitiGroup (C): 61.9%
- Wells Fargo (WFC): -15.2%
The stock of Bank of America has easily outperformed that of Wells Fargo and Citi over the last 5 years.
Latest stock valuation of Wells Fargo (WFC)
So what is Wells Fargo (WFC) stock worth based on their 1st quarter 2021 earnings report? Based on their earnings report our valuation model provides a target price (full value price) for Wells Fargo at $53.20 a stock
We therefore believe the stock of Wells Fargo is undervalued at its current price of $41.80
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $53.20, thus a good entry point into Wells Fargo would be at $47.90 or below.
We expect the stock of Wells Fargo to kick up from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is undervalued
We therefore believe the stock of Wells Fargo is undervalued at its current price of $41.80
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $53.20, thus a good entry point into Wells Fargo would be at $47.90 or below.
We expect the stock of Wells Fargo to kick up from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is undervalued
Next earnings release of Wells Fargo (WFC)
It is expected that Wells Fargo will release their 2nd quarter 2021 earnings report in mid July 2021
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