As I wrote in a recent article, "With the Federal Reserve as the 'wind beneath its wings,' the big banks may continue to soar. That's why I'd call Wells Fargo the alpha financial stock for 2013." Well Fargo's trailing-12-months operating cash flow (as of the quarter ending Sept. 30th) was $26.06 billion. On Friday WFC will report to the world its earnings for the last quarter of 2012. Expectations of the analysts who follow WFC speak to its capital efficiency and cash generating acumen. Most large-cap stocks were once small and mid-cap stocks. Bryan Ashenberg is here to help you find the cream of the crop amongst the market chaos. As I wrote in the above referenced article, "EPS for the year (2012) is expected to come in at $3.35, an almost 19% increase over 2011. The final revenue numbers for 2012 should be close to $85.7 billion, which should help boost the operating cash flow and total cash (which stood at $176.43 billion by the end of WFC's last quarter)."
Please notice how similar the above chart of CSCO looks to WFC's one-year chart of the same metrics. These levels of capital efficiency allow strong companies like CSCO and WFC to grow organically and by acquisition. It also allows them to pay a generous total return dividend through cash payouts and stock buybacks. WFC pays an annual 88 cents per share dividend. If you're fortunate and patient enough to buy the stock when it trades for $33 you'll be paid a yield to price of almost 2.7%. That represents a payout ratio of only 25%, and that often indicates that as revenue and total cash grows so will the dividend and the share price.