Reasons to Add Wells Fargo (WFC) Stock to Your Portfolio Now

Adding Wells Fargo & Company WFC stock to your portfolio seems to be a wise idea now. Supported by strong fundamentals, the company is well-poised for growth.

The Zacks Consensus Estimate for Wells Fargo’s 2024 and 2025 earnings have moved 5.7% and 2% north, respectively, indicating that analysts are optimistic regarding its earnings growth potential. WFC currently sports a Zacks Rank #1 (Strong Buy).

In the past six months, the company’s shares have gained 33.4% compared with the industry’s growth of 26%.

Let’s delve into some of the important factors that make WFC stock worth a look.

Earnings Growth: WFC’s earnings have witnessed a rise of 3.8% in the past five years, higher than the industry's growth of 3.2%. The company’s earnings are projected to grow 7.5% in the next five years, suggesting a rise from industry-expected growth of 7.4%. For 2025, the company expects an earnings growth rate of 9.8%.

Impressive Capital Distribution: Wells Fargo has impressive capital deployment activities. Following the clearance of the 2023 stress test, the company raised its dividend by 16.7% to 35 cents per share in July 2023. The company has a share repurchase program in place. Last July, the company’s board of directors authorized a new share repurchase program worth $30 billion. In first-quarter 2024, Wells Fargo repurchased 112.5 million shares for $6.1 billion.

The company has a share repurchase program in place. In the first quarter, Wells Fargo repurchased 112.5 million shares for $6.1 billion. Management expects to buy back more of its common stock in 2024 compared with 2023. As of Mar 31, 2024, the company had approximately $20.7 billion worth of common stock remaining under the buyback plan.

Zacks Investment ResearchImage Source: Zacks Investment Research

Given its robust capital position and ample liquidity, the company’s capital-deployment activities seem sustainable and will boost investors’ confidence in the stock.

Expense Management: Wells Fargo’s prudent expense management initiatives support its financials. Since third-quarter 2020, the company has been actively engaged in cost-cutting measures, including the streamlining of its organizational structure, closure of branches and reduction in headcount. Non-interest expenses witnessed a negative CAGR of 1.1% over the last four years (ended 2023). The bank delivered gross expense savings aggregating $10 billion in 2021-2023. The company expects to continue with these efficiency initiatives this year, too.

Strong Balance Sheet: The company has a strong liquidity position, with a liquidity coverage ratio of 126% as of first-quarter 2024, which has been above its regulatory minimum of 100%. Its liquid assets (including cash and due from banks, as well as interest-earning deposits with banks) totaled $269.6 billion as of the same date. It also maintains long-term issuer investment-grade credit ratings of A+, A1 and BBB+ from Fitch, Moody’s and S&P Global, respectively. Given the solid credit profile and liquidity position, it will be able to meet its near-term debt obligations, even if the economic situation worsens.

Other Stocks to Consider

Some other top-ranked bank stocks worth mentioning are Northern Trust Corporation NTRS and BankUnited, Inc. BKU.

Northern Trust’s earnings estimates for 2024 have remained unchanged in the past seven days. The company’s shares have gained 3.6% in the past six months. At present, NTRS sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

BankUnited’s 2024 earnings estimates have revised upward marginally in the past 30 days. The stock has gained 8.2% in the past three months. Currently, BKU carries a Zacks Rank #2 (Buy).

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Wells Fargo & Company (WFC) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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