Wells Fargo Valuation!

Dear Reader,


Here I am going to attempt to value Wells Fargo & Company, the San Francisco based US and global corporate and retail bank with investment banking activities as well.

Wells Fargo is currently valued at 200.77 billion USD by US public stock markets. I think Wells Fargo is circa 10% undervalued. Why? Because at Price/Earnings ratio of 11.99 and Price/Book value ratio of 1.20 Wells Fargo looks undervalued both compared to peers like JPMorgan Chase and in historical context. A downside for Wells Fargo is the existing cap on Wells Fargo's assets at 1.95 trillion USD assets which was the status quo at the end of 2017 when the Federal Reserve imposed the ban on Wells Fargo to raise its assets beyond 1.95 trillion for dubious activities that affected many customers of Wells Fargo. As a result Wells Fargo's both assets and net income are either not growing or slightly shrinking.

I personally expect the ban on assets for Wells Fargo to be lifted sooner rather than later. In addition to that, Wells Fargo is engaged at the highly profitable consumer banking business, which exhibits high net profit margin. Wells Fargo is very active in both corporate and investment banking, which contribute very much to its both top and bottom line. Basically, I believe the intrinsic value of Wells Fargo is circa 10% higher than its current market capitalization level. The main driver for the higher intrinsic value of Wells Fargo as estimated by myself is the consumer banking business with its high profitability. In addition Wells Fargo keeps making inroads in corporate and investment banking.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently! Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is as is.

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich