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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Wells Fargo & Company (XNYS:WFC) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
WFC
Name:
WELLS FARGO & COMPANY (XNYS:WFC)
Sector:
199.00M
Industry:
Banks�Diversified
CEO:
Mr. Charles Scharf
Total Employees:
243,674
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -62.76% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF WELLS FARGO & COMPANY(WFC) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND BANKS�DIVERSIFIED INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
43.38
One Month Price Target:
$43.66
Six Month Price Target :
$45.06
Likely Price in One Year's Time:
Ticker:
$46.74
Likely Trading Range Today Under (Normal Volatility)
$43.17
Price Upper limit ($) :
$43.6
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$40.8
This week:
$37.61
This month :
$31.84
Other Primary facts
Market Cap:
162.80B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
3.79B
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
14.53%
-15.87%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$55.36
$49.90
$31.40
$36.86
Medium risk (<10%) entry points
Buy Call
Sell Call
$48.13
Buy Put:
Sell Put:
$46.96
$38.62
$39.80
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
WFC
Sharpe Ratio:
0.13%
Comparison:
WFC, is amongst the top 40% stocks with lowest risk-adjusted returns
Sharpe ratio is -80.41% lower than the industry
& is -94.45% lower than the market/S&P 500 average
Average Returns/Yield of
WFC
Daily returns:
0.01%
Weekly returns:
0.06%
Monthly returns:
0.25%
Yearly returns:
6.86%
Comparison of returns:
Average annual returns/yield (last 3 years) is -56.17% below industry average
Classification:
WFC, is amongst the top 40% lowest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.66
Statistical test of Returns:
WFC has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.90%
Weekly Volatility:
6.49%
Monthly Volatility:
12.98%
Yearly Volatility:
44.96%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.67%
Volatility in last five trading days has been -76.81% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-5.95%
Weekly VaR:
-13.30%
Monthly VaR:
-26.60%
How Much Can the price of
WFC
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-23%
Worst case (decline):
-92.15%
This translates to price declining to:
$33.24
This translates to price declining to:
$3.41
Severe Crash Probability
Risk of crash in next 6/12 months: Low (<25%)
What is Value at Risk (VaR)?
Risk Fundamentals
WFC is a 87.75% riskier investment compared to the market/S&P 500 & is 60.84% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 3.12% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
WFC
Beta in relation to market/S&P 500--1.15
Expected beta in 1 year's time:
0.749
Expected beta in 3 year's time:
1.059
Unlevered (debt free) Beta:
0.683
Beta in relation to Nasdaq (XNAS):
0.864
Beta in relation to all global stocks::
0.981
Beta Comparison & Analysis
Beta of competitors/peers::
1.029
Beta is 12.08% higher than peers
Average Industry Beta:
1.341
Beta is -13.98% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
8.43%
Sustainable growth rate is -17.91% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.080
Alpha is 46.81% above industry average alpha yield
Alpha is -512% below the market average
Analysis of Cost of Capital of
WFC
Equity cost of capital:
0.111
Equity cost of capital is -10.41% below industry mean WACC
Unlevered (without debt) cost of capital:
6.54%
Before-tax cost of debt:
1.94%
After-tax cost of debt:
1.53%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.53%
WACC is -11.32% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$20.45
Revenue growth rate per share of (3Y):
0.91
Annual revenue growth rate is -66.20% below industry average
EPS:
$4.81
Expected Annual growth rate of EPS (3Y):
6.66%
Expected future EPS growth rate is -23.11% lower than the Banks�Diversified industry
Free cash flow (FCF) per share:
-
Balance sheet equity growth per share: -54.61%
Equity growth rate per share is -351.30% lower than the industry
Debt per share
$40.43
EBITDA per share
$9.76
Valuation Analysis Today of
WFC
P/E Ratio:
10.4
P/E Ratio of Competitors/Peers:
14.68
P/E ratio is -29.15% lower than main peers & is 3.01% higher than the industry
Stock price/value with industry average P/E ratio: $48.58
WFC is -10.70% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $35.11
Present value of the expected future dividends only: $14.26
P/S (Price to Sales ratio):
2.12
Price to sales ratio is -43.16% below the industry mean
P/B (Price to book value ratio):
0.91
-
-
Net income growth rate (3Y):
12.16%
Net income growth rate is -68.47% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 1.07%
Dividend yeild: 2.07%
Previous Dividend: $0.25
Previous adjusted dividend: $0.25
Previous Dividend: $0.90
Expected next dividend best case: $0.39
Expected next dividend worst case: $0.11
Average dividend payment (long-term): $0.26
Average dividend increase/decrease (growth rate) % per period: 4.46%
Expected next dividend payment date: 30/08/2022
Expected next dividend record date: 08/04/2022
Expected next dividend declaration date: 25/07/2022
Previous dividend payment date: 06/01/2022
Previous dividend record date: 05/06/2022
Previous dividend declaration date: 26/04/2022
Dividend History:
2022-05-05--$0.25
2021-11-04--$0.20
2021-05-06--$0.10
2022-02-03--$0.25
2021-08-05--$0.20
2021-02-04--$0.10
Dividend growth rate is -328.51% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
85.55%
Net debt to equity ratio:
-8.34%
Debt to assets ratio:
7.91%
Net debt to assets ratio:
-0.77%
Debt-to-asset ratio is -91.32% below industry average
Ability to repay debt:
Interest coverage ratio:
10.21
Interest coverage ratio is 146.45% more than industry average
Looking forward:
Debt growth rate:
-22.91%
Annual debt growth is 96% higher than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.698
Statistical significance of correlation:
WFC has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.68
Stock price is 2.71% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.68
Correlation of price movement with Nasdaq (^IXIC):
0.077
Covariance of price movement with the market:
0.13
Kurtosis
4.778
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.054
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
WFC
Gross Profit Margin Ratio:
100%
Operating Profit Margin Ratio:
6.81%
Operating profit margin is -81.07% lower than the industry
Net Profit Margin Ratio:
100%
Effective Tax Rate:
19.41%
Effective tax rate is 27.08% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
11.48%
Return on equity (ROE) is -11.70% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
1.06%
Return on assets (ROA) is -6.24% lower than the industry
Financial Leverage:
1.1x
Current Ratio:
0.82
-
Cash Conversion Cycle (days):
0
-
The remaining useful life of property plant & equipment is: 0.7 years
Stock based compensation to net income ratio:
-
In-depth Efficiency Analysis
Revenue generated per employee:
318.3K
Each employee generates -24% less revenue than industry average revenue per employee
EBITDA generated per employee:
152.0K
Each employee generates -34% less EBITDA than industry average revenue per employee
Profit generated per employee:
84.5K
Each employee generates -44% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
0.8K
Each employee generates -101% less free cash flow than industry average revenue per employee
Assets/Capital per employee
2.7M
Each employee generates -101% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
WFC
MORGAN STANLEY (XNYS:MS)
THE CHARLES SCHWAB CORPORATION (XNYS:SCHW)
ROYAL BANK OF CANADA (XNYS:RY)
BLACKROCK, INC. (XNYS:BLK)
AMERICAN EXPRESS COMPANY (XNYS:AXP)
HSBC HOLDINGS PLC (XNYS:HSBC)
THE GOLDMAN SACHS GROUP, INC. (XNYS:GS)
HDFC BANK LIMITED (XNYS:HDB)
-
Current Analyst Ratings
Strong buy�17%
Buy�33%
Hold�63%
Sell�17%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
77.55B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
-
17.59B
-
35.67B
36.28B
609.00M
- 9459000.00K
99.00M
39.82B
3.63B
7.44B
37.04B
-
20.58B
27.73B
5.38B
20.58B
Statement of Cash Flow
Date:
Period:
1.79B
Differed Income Tax :
- 179000.00K
Stock Based Compensation :
-
Change in Working Capital :
- 5215000.00K
Accounts Receivables:
-
Other Working Capital:
-
Other Non-Cash Items:
131.00M
Net Cash Provided by Operating Activities:
199.00M
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
- 16095000.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
201.90B
168.44B
370.33B
14.47B
-
- 357344280.00K
27.46B
8.47B
25.18B
9.75B
606.67B
-
-
650.08B
2562.33B
1939.71B
-
33.60B
2.16M
-
-
33.60B
153.34B
-
153.34B
1877.76B
1758.02B
9.14B
182.62B
- 6767000.0K
- 25806000.00K
March 31, 2022 at 6:00:00 AM
-
179.24B
1937.26B
775.11B
186.94B
- 14957000.0K
4.14B
- 11009000.00K
- 22961000.00K
-
-
-
- 220000.00K
- 9353000.00K
- 9573000.00K
-
- 32335000.00K
201.90B
234.23B
199.00M
-
199.00M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
WFC
2023
2024
2025
2026
2027
$46.97
$66.14
$71.27
$76.80
$82.75