It's been a great morning session for Wells Fargo & Company investors, who saw their shares rise 2.4% to a price of $43.28 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
Wells Fargo & Company Is Potentially Undervalued and Trades Below Its Graham Number:
Wells Fargo & Company, a diversified financial services company, provides banking, investment, mortgage, and consumer and commercial finance products and services in the United States and internationally. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 14.34 and an average price to book (P/B) ratio of 1.57. In contrast, Wells Fargo & Company has a trailing 12 month P/E ratio of 10.9 and a P/B ratio of 0.99.
Wells Fargo & Company's PEG ratio is 1.28, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
The Business Runs With Low Debt Levels:
| 2018-03-01 | 2019-02-27 | 2020-02-27 | 2021-02-23 | 2022-02-22 | 2023-02-21 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $88,389 | $86,408 | $86,832 | $74,264 | $78,492 | $73,785 |
| Operating Margins | 31% | 33% | 30% | 5% | 37% | 20% |
| Net Margins | 25% | 26% | 23% | 5% | 27% | 18% |
| Net Income (MM) | $22,183 | $22,393 | $19,715 | $3,377 | $21,548 | $13,182 |
| Earnings Per Share | $4.1 | $4.28 | $4.09 | $0.43 | $5.24 | $3.16 |
| EPS Growth | n/a | 4.39% | -4.44% | -89.49% | 1118.6% | -39.69% |
| Diluted Shares (MM) | 5,017 | 4,838 | 4,425 | 4,134 | 3,869 | 3,820 |
| Long Term Debt (MM) | $225,020 | $229,044 | $228,191 | $212,950 | $160,689 | $174,870 |
Wells Fargo & Company has weak revenue growth and no capital expenditures, weak net margins with a negative growth trend, and flat EPS growth. We also note that the company has low debt levels working in its favor. Furthermore, Wells Fargo & Company's financial statements do not display any obvious red flags.
