NEW YORK (
-- Wells Fargo
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, expanding profit margins, good cash flow from operations, notable return on equity and attractive valuation levels. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- WELLS FARGO & CO has improved earnings per share by 20.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WELLS FARGO & CO increased its bottom line by earning $2.21 versus $1.77 in the prior year. This year, the market expects an improvement in earnings ($2.81 versus $2.21).
- The gross profit margin for WELLS FARGO & CO is currently very high, coming in at 83.80%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, WFC's net profit margin of 19.10% significantly trails the industry average.
- Net operating cash flow has significantly increased by 55.19% to $9,228.00 million when compared to the same quarter last year. Despite an increase in cash flow of 55.19%, WELLS FARGO & CO is still growing at a significantly lower rate than the industry average of 1364.55%.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, WELLS FARGO & CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
Wells Fargo & Company, through its subsidiaries, provides retail, commercial, and corporate banking services primarily in the United States. The company operates in three segments: Community Banking; Wholesale Banking; and Wealth, Brokerage, and Retirement. The company has a P/E ratio of 10, above the average banking industry P/E ratio of 9.4 and below the S&P 500 P/E ratio of 17.7. Wells Fargo has a market cap of $133.47 billion and is part of the
industry. Shares are down 12.1% year to date as of the close of trading on Friday.
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