Summary
- Wells Fargo's business has been doing well amid a recent decline in net interest margin.
- The company pays out a generous dividends which seem to be sustainable.
- Its shares trade at attractive valuation multiples.
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Investment Thesis
Shares of Wells Fargo (WFC) have rebounded particularly well from the lows of global financial crisis and might be up for a continued growth as the company continues with the introduction of new products, pays increasingly higher dividends and showcases positive developments of loan and deposit balances.
Corporate profile
Wells Fargo & Company is the fourth largest bank in the U.S. by market capitalization and total assets with operations all across the globe. Its product portfolio consists of a broad range of services encompassing not only banking but also asset management, brokerage, foreign exchange, futures and commodities trading, underwriting, wealth management, risk management and insurance. As of December 31, 2018, the company had 258,700 active, full-time employees.
Key insights from the latest quarterly earnings call
Reading through the latest quarterly earnings call transcript, the company preserved its highly innovative spirit with ongoing commitment to Wells Fargo startup accelerator (carrying 25 companies covering areas such as augmented reality and climate change risk) or Wells Fargo digital cash. Even though the company’s net interest margin is lagging behind the U.S. banking industry average by a few dozen basis points, the company managed to record increases in both loan and deposit balances.
