With shares of Wells Fargo & Company (NYSE:WFC) trading at around $34.80, is WFC an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
Wells Fargo just beat expectations, yet the stock is down over two percent. This usually happens when guidance is weak. In this case, the primary reason for the drop is net interest margin, which came in at 3.56 percent versus 3.89 percent last year.
Wells Fargo did show a profit of $5.1 billion in Q4, which is a 24 percent increase YoY. This is mostly due to strength in the mortgage business. Low interest rates have led to an increase in refinancing activity. EPS came in a $0.91, which beat expectations of $0.89. Revenue also increased 7 percent YoY and came in at $21.95 billion. Wells Fargo took in $152 billion in home mortgage applications, but this is down from $157 billion last year. Profits in the community banking division increased 14 percent, coming in a $2.9 billion.
Let’s take a look at some more important numbers.