Conservative Wells Fargo Bank Shows Boring Stock Price (NYSE:WFC) | Techy Kings

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Justin Sullivan

Wells Fargo (NYSE:WFC) is a conservative bank with no previous exciting plans. Its forward guidance estimates show relatively low strength but that doesn’t mean the company will lose money. When the world moves towards potential long-term recession, it may be worth holding for small predictable gains in the coming years.

Basic has been flat

Ratio

Profit margins were flat for Wells Fargo stock.

Metric

2017

2018

2019

2020

2021

Period

FY

FY

FY

FY

FY

Overdue sales days

271.615

253.706

234.088

296.803

182.774

Net profit margin

0.257

0.259

0.230

0.046

0.275

Source: Financial Modeling Prep

Data

All significant simple moving average periods show gains, but they are relatively poor compared to other companies. So, as we know about the opportunity cost of investing in Wells Fargo, it is better to look elsewhere for more profitable companies with faster moving stock prices.

Metric

Value

SMA20

0.26%

SMA50

5.09%

SMA200

1.23%

Source: FinViz

Enterprise

Consider that Wells Fargo’s stock price historically peaked in 2017 and continued to decline to 2020 levels during the pandemic. However, Wells Fargo’s stock price rebounded quite nicely, nearly doubling in 2021.

Market capitalization has declined steadily from 2017 to the 2020 pandemic. But, just like the stock price, Wells Fargo’s market cap nearly doubled last year.

Metric

2017

2018

2019

2020

2021

Symbol

WFC

WFC

WFC

WFC

WFC

Stock price

65,280

50,090

47,910

29,880

54.190

Number of shares

4.965 B

4,800 B

4.393 B

4.118 B

4.062 B

Market capitalization

324.089 B

240.417 B

210.473 B

123.046 B

220.114 B

Source: Financial Modeling Prep

Budget

For guidance, it’s very conservative at Wells Fargo because they only offer two years out. Most companies with strong future momentum will offer up to six years. When there are only two, it shows that the company is probably very uncertain about its future in my opinion. Also, it is generally common knowledge that Wells Fargo is a very conservative bank.

As can be seen, revenue has about a 10% growth rate over two years. Therefore, the dividend yield may increase by 50%, but it is still relatively low compared to higher dividend offers elsewhere. However, earnings per share are increasing, so one would expect the stock price to perform well based on these expectations.

ANNUAL ESTIMATE

2022

2023

2024

Results

74,209

81,615

83,098

Dividends

1.10

1.33

1.59

Dividend Yield (in %)

2.36 %

2.84 %

3.40 %

EPS

3.77

5.13

5.76

P/E ratio

12.39

9.11

8.11

EBIT

20,800

28,826

29,555

EBITDA

Net profit

14,691

19,080

20,714

Source: BusinessInsider

Technical Analysis Shows Worthy Recovery

Fibonacci

It may take weeks to months for Wells Fargo’s stock price to reach its previous highs of the last year. The recent week’s simple moving average may take longer than imagined. There appears to be minimal momentum in the stock price for Wells Fargo.

fargo's fibonacci well

fargo’s fibonacci well (custom platform)

Bollinger Bonds

Based on the recent price action of Wells Fargo’s stock price, the price may rise faster than expected.

bollinger wfc

bollinger wfc (custom platform)

MACD

When investors look at the latest MACD price action, it shows minimal downside; showing almost full price recovery. So Wells Fargo’s current stock price has shown potential to maximize as it may begin to pull back to the zero line.

macd wfc

macd wfc (custom platform)

RSI

As predicted, Wells Fargo’s recent share price action has reached its maximum potential on this latest rise. It will then decline or flatten as the RSI drops back to a more reasonable rating of potentially 50. As the fundamentals confirm, there needs to be more sustained momentum to continue pushing Wells Fargo’s share price higher.

rsi wfc

rsi wfc (custom platform)

Predictions through AI

Monte Carlo

this Monte Carlo simulations show an estimated ratio of 3:1 or 3:2 for higher stock price activity. As a result, there is a higher probability for Wells Fargo’s stock price to be in the forecast path.

The accompanying normal distribution shows a higher probability of expected stock price growth. The numbers shown may be more convincing, but the trend is clear to see higher price expectations at Wells Fargo.

montecarlo wfc

montecarlo wfc (custom platform)

Regression

As for the 30-day forecast, it has a red regression line; there seems to be no rise or fall in stock prices. The stock’s weak growth is confirmed by last week’s simple moving average of 20 working days.

wfc regression

wfc regression (custom platform)

Show Safe Betting Risks Moving Forward

Because there is short-term stock price upside for Wells Fargo, the interest required to potentially short the stock price is not prioritized; therefore, it falls well below the 50 percent line.

short wfc

short wfc (custom platform)

Source: StockGrid

Recommendation

In the past week or month, one can see how market analysts are very conservative but most still have a buy rating. However, only on the last day these analysts signaled a sell rating.

Time interval

PROPOSAL

BUY

SELL

NEUTRAL

One month

BUY

13

4

9

A week

BUY

10

7

9

One day

SELL

4

13

9

Source: Trade Outlook

Sustainability

One bright spot for Wells Fargo is its sustainability rating with better performance. Again, this bank seems to be setting a standard that any bank should be able to achieve regardless of how many loans they offer.

Metric

Value

Social score

15.4

Peer count

172

Governance scores

15.51

Total esg

32.84

The highest controversy

5

ESG performance

OUT_PERF

Percentile

72.65

Environment score

1.94

Source: Yahoo Finance

Due Diligence

Price Target

Sometimes market analysts will set stock price targets that are arguably unrealistic for any company to achieve. In the case of Wells Fargo, I think one can see this, which sometimes means either the stock price is underperforming or the market analysts are unrealistic with their predictions.

target wfc

target wfc (custom platform)

Source: BusinessInsider

Conclusion

Since Wells Fargo is a relatively conservative bank that has shown weak but profitable strength over the past 200 business days, it is safe to say that there will be little growth in the stock price. As my fundamental analysis shows, there is a bearish forecast for the stock price. Further analysis says otherwise. Although there is no certainty about the market direction for Wells Fargo and its conservative stance on future growth, it is better to hold this stock. Unless strong momentum comes into the stock price, indicating it will outperform its competition, it may be better for investors to look elsewhere for better long-term opportunities.

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