NEW YORK (TheStreet) -- Shares of Wells Fargo & Co. (WFC) are down 0.14% to $53.76 after the Financial Stability Board (FSB) said that the world's largest banks will have to build up their loss-absorbing liability buffers to see them through a crisis, Bloomberg reports.
The FSB, led by Bank of England Governor Mark Carney, said today that the biggest banks may be required to have total loss-absorbing capacity (TLAC) equivalent to as much as a quarter of their assets weighted for risk, according to Bloomberg.
"The outlines of how we are going to end too-big-to-fail are here," Carney said.
The TLAC rules would apply at the earliest in 2019 to the FSB's register of global systemically important banks, Bloomberg added, noting, the latest list, published last week, contains 30 banks, with HSBC Holdings Plc (HSBC) and JPMorgan Chase & Co. (JPM) identified as the most significant.
Separately, TheStreet Ratings team rates WELLS FARGO & CO as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate WELLS FARGO & CO (WFC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- WFC's revenue growth has slightly outpaced the industry average of 0.1%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 27.37% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, WFC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- WELLS FARGO & CO's earnings per share improvement from the most recent quarter was slightly positive. 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 $3.89 versus $3.36 in the prior year. This year, the market expects an improvement in earnings ($4.10 versus $3.89).
- The gross profit margin for WELLS FARGO & CO is currently very high, coming in at 93.74%. Regardless of WFC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 25.76% trails the industry average.
- The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Commercial Banks industry average. The net income increased by 2.7% when compared to the same quarter one year prior, going from $5,578.00 million to $5,729.00 million.
- You can view the full analysis from the report here: WFC Ratings Report