I started a position in WFC a few years back and have experienced very little total return at this point. As is well known, the company has been in the headlines for unfavorable reasons that past couple of years and as a result has been the favorite target of a handful of politicians. The most recent CEO, Tim Sloan, resigned a few short weeks ago and so the company is currently conducting a search for his replacement. The vacant CEO position combined with the revised guidance the company outlined with the recent quarterly report is of course weighing stock valuation. Despite these headwinds, I believe the company is attractively valued for the long term and so I decided to increase my position. See below for the details of the purchase.
Purchased: 28 shares x $46.50 = $1,302 (+$0 commission)
Forward P/E ratio: 9.73 vs. S&P Forward P/E @ 17.35
S&P and/or Moody's credit rating of BBB+/Baa1 or better: Yes, A-/A2
Current dividend yield > 1.5x S&P yield: Yes. 3.87% vs. S&P's 1.92%
Payout Ratio < 60% (or < 85% for utilities): Yes, 37.46%
Dividend King or CCC classification: Challenger (8 consecutive years of dividend increases)
Comments: As mentioned above, WFC kicked off earnings season recently along with JPM and the earnings release for Q1 2019 can be read here. The first page of which can be seen below. With what seems to be a lead anchor that is perpetually weighing on WFC stock, has allowed investors and management to accumulate large sums of stock at depressed valuations. You'll note in the earnings release that WFC purchased $3.9B of stock just in Q1 2019 alone. Furthermore, the period end common share count outstanding is down 7% compared to last year - fantastic! Also, in a separately interview after the earnings release, the CFO mentioned that Wells Fargo's customer ratings are at its highest point over the last several years which includes a period of time before their retail consumer debacles were brought to light in 2016, which is certainly good news to build upon.
Purchased: 28 shares x $46.50 = $1,302 (+$0 commission)
Total share count now stands at 92
Dividend Income: This purchase adds $50.40 of income annually ($1.80 annual dividend; paid quarterly in Mar, Jun, Sep, and Dec)
Forward P/E ratio: 9.73 vs. S&P Forward P/E @ 17.35
S&P and/or Moody's credit rating of BBB+/Baa1 or better: Yes, A-/A2
Current dividend yield > 1.5x S&P yield: Yes. 3.87% vs. S&P's 1.92%
Payout Ratio < 60% (or < 85% for utilities): Yes, 37.46%
Dividend King or CCC classification: Challenger (8 consecutive years of dividend increases)
Comments: As mentioned above, WFC kicked off earnings season recently along with JPM and the earnings release for Q1 2019 can be read here. The first page of which can be seen below. With what seems to be a lead anchor that is perpetually weighing on WFC stock, has allowed investors and management to accumulate large sums of stock at depressed valuations. You'll note in the earnings release that WFC purchased $3.9B of stock just in Q1 2019 alone. Furthermore, the period end common share count outstanding is down 7% compared to last year - fantastic! Also, in a separately interview after the earnings release, the CFO mentioned that Wells Fargo's customer ratings are at its highest point over the last several years which includes a period of time before their retail consumer debacles were brought to light in 2016, which is certainly good news to build upon.
Hi,
ReplyDeleteI'm a big fan of your articles, really like your style and though process.
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Best,
Matus
Hello Matus,
DeleteThanks for stopping by. I've spent a short while browsing the site and have bookmarked it as an additional resource. I like the layout and design - simple enough to navigate from place to place very easily. Is the financial information sourced from S&P? Also, I've picked up a few good links from the community page to check out later. I noticed that someone had posted a link to Seth Klarman's book, Margin of Safety, which I read a few years back. A great book!
i just purchased 200 shares @ 47.95
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