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Is Wells Fargo & Co (WFC) Stock Trading Below Fair Value?

Friday, April 09, 2021 02:46 PM | InvestorsObserver Analysts

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Is Wells Fargo & Co (WFC) Stock Trading Below Fair Value?

Wells Fargo & Co (WFC) receives a strong valuation score of 79 from InvestorsObserver's analysis. Our proprietary scoring system considers the overall health of the company by looking at the stock's price, earnings, and growth rate to determine if it represents a good value. WFC holds a better value than 79% of stocks at its current price. Investors who are focused on long-term growth through buy-and-hold investing will find the Valuation Rank especially relevant when allocating their assets.

Valuation Rank - 79
WFC gets a 79 Valuation Rank today. Find out what this means to you and get the rest of the rankings on WFC!

Metrics Analysis

WFC has a trailing twelve month Price to Earnings (PE) ratio of 97.5 which places it above the histroical average of roughly 15. WFC is currently trading at a poor value due to investors paying more than what the stock is worth in relation to its earnings. WFC's trailing-12-month earnings per share (EPS) of 0.41 does not justify its share price in the market. Trailing PE ratios do not factor in the company's projected growth rate, thus, some firms will have high PE ratios caused by high growth recruiting more investors even if the underlying company has produced low earnings so far.

WFC's 12-month-forward PE to Growth (PEG) ratio of 1.43 is considered a poor value as the market is overvaluing WFC in relation to the company's projected earnings growth due. WFC's PEG comes from its forward price to earnings ratio being divided by its growth rate. A PEG ratio of 1 represents a perfect correlation between earnings growth and share price. Due to their incorporation of more fundamentals of a company's overall health and focusing on the future rather than the past, PEG ratios are one of the most used valuation metrics by analysts today.

Summary

WFC' has a weak valuation at its current share price on account of a overvalued PEG ratio despite strong growth. WFC's PE and PEG are worse than the market average leading to a below average valuation score.

Click Here to get the full Stock Score Report on Wells Fargo & Co (WFC) Stock.

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