On Tuesday, Wells Fargo reported a second-quarter loss wider than anticipated by analysts. The bank also cut its dividend as coronavirus pandemic continues to wreak havoc in the economy.
Wells Fargo ‘s net loss for the quarter came in at -$2.4 billion, or -66 cents a share, compared to income of +$6.2 billion, or +$1.30 a share in the year-ago quarter. The loss was steeper than -16 cents a share loss expected by analysts polled by FactSet.
Revenue of $17.8 billion was lower than year-ago quarter’s $21.6 billion.
Net interest income of $9.88 billion fell -$2.2 billion year-over-year. Non-interest income was $8 billion, down -$1.5 billion year-over-year.
Average deposits was $1.4 trillion, up + 9% from a year earlier.
The company affirmed its plans to slash its dividend to 10 cents a share from the 51 cents – a cut greater than what analysts expected.
Tickeron's AI-powered scorecard rates WFC a Strong Sell.
WFC's in Downtrend: Moving Average Convergence Divergence (MACD) Histogram crosses below signal line
This is a Bearish indicator signaling WFC's price could decline. Traders may explore shorting the ticker or looking at put options. In 27 of 41 cases where WFC's MACD histogram became negative, the price fell further within the following month. The odds of a continued Downtrend are 66%.
Current price $23.86 is below $23.92 the lowest support line found by A.I. Throughout the month of 06/10/20 - 07/13/20, the price experienced a -14% Downtrend. During the week of 07/06/20 - 07/13/20, the stock fell -0.31%.
Technical Analysis (Indicators)
Bearish Trend Analysis
The RSI Indicator appears to be shifting from an Uptrend to a Downtrend. In 18 of 35 cases where WFC's RSI indicator exited the overbought zone, the price fell further within the following month. The odds of a continued Downtrend are 51%.
The price moved below its 50-day Moving Average, which indicates a reversal from an Uptrend to a Downtrend. In 19 of 34 cases where WFC's price crossed below its 50-day Moving Average, its price fell further within the subsequent month. The odds of a continued Downtrend are 56%.
The 10-day Moving Average for this ticker crossed below its 50-day Moving Average on June 30, 2020. This can be construed as a sell signal, indicating that the trend is shifting lower. In 9 of 16 cases where WFC's 10-day Moving Average crossed below its 50-day Moving Average, its price fell further within the subsequent month. The odds of a continued Downtrend are 56%.
The Aroon Indicator entered a Downtrend today. In 114 of 220 cases where WFC Aroon's Indicator entered a Downtrend, the price fell further within the following month. The odds of a continued Downtrend are 52%.
Bullish Trend Analysis
The Stochastic Indicator suggests the ticker price trend may be in a reversal from a Downtrend to an Uptrend. 28 of 55 cases where WFC's Stochastic Indicator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued Uptrend are 51%.
The Momentum Indicator exceeded the 0 level on July 13, 2020. Traders may consider buying the ticker or exploring call options. In 45 of 87 cases where the ticker's Momentum Indicator exceeded 0, its price rose further within the subsequent month. The odds of a continued Uptrend are 52%.
Fundamental Analysis (Ratings)
Tickeron has a negative outlook on this ticker and predicts a further decline by more than 4.00% within the next month with a likelihood of 66%. During the last month, the daily ratio of advancing to declining volumes was 1.13 to 1.
The Tickeron Profit vs. Risk Rating rating for this company is 100 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. WFC’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 92, placing this stock worse than average.
The Tickeron SMR rating for this company is 91 (best 1 - 100 worst), indicating slightly better than average sales and a considerably profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is 64 (best 1 - 100 worst), indicating fairly steady price growth. WFC’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron PE Growth Rating for this company is 53 (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Valuation Rating of 7 (best 1 - 100 worst) indicates that the company is seriously undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (0.66) is normal, around the industry mean (0.89). P/E Ratio (8.97) is within average values for comparable stocks, (9.01). Projected Growth (PEG Ratio) (1.15) is also within normal values, averaging (7.01). Dividend Yield (3.57) settles around the average of (2.78) among similar stocks. P/S Ratio (1.24) is also within normal values, averaging (1.52).