Wells Fargo & Co Stock Buy Recommendation Reiterated (WFC)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Wells Fargo (NYSE: WFC) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

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Highlights from the ratings report include:
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • WELLS FARGO & CO has improved earnings per share by 22.2% 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 $2.82 versus $2.21 in the prior year. This year, the market expects an improvement in earnings ($3.35 versus $2.82).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 21.8% when compared to the same quarter one year prior, going from $4,055.00 million to $4,937.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 14.5%. Since the same quarter one year prior, revenues slightly increased by 5.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 60.46% to $14,808.00 million when compared to the same quarter last year. In addition, WELLS FARGO & CO has also vastly surpassed the industry average cash flow growth rate of -33.43%.

Wells Fargo & Company provides retail, commercial, and corporate banking services. The company operates in three segments: Community Banking; Wholesale Banking; and Wealth, Brokerage, and Retirement. Wells Fargo has a market cap of $180.99 billion and is part of the financial sector and banking industry. The company has a P/E ratio of 10.8, below the S&P 500 P/E ratio of 17.7. Shares are up 24.7% year to date as of the close of trading on Tuesday.

You can view the full Wells Fargo Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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