Scandals have befallen this banking sector giant so much, it seemed they would be the end of this bank. But this company has made a complete U-turn and has re-cemented its name among the top banks in the United States. So, while reputation is still being rebuilt, the financials look to have recovered. We present to you, Wells Fargo & Company (NYSE: WFC).
Source: Expect Best
The first of the scandals that arose against Wells Fargo was when it was culpable of opening unauthorized customer accounts in millions. Scandals about customer abuse and other exploitive actions on small businesses soon followed suit.
If you had asked any customer then, they would have told you they would never bank with Wells Fargo again. The bank was all but done. Fast forward to 2022 and a new CEO later, we’re talking about the value and growth potentials of this stock.
How things have changed for the company since then. You only need to take a look at the financial report for evidence of this turnaround.
The company recorded YoY revenue growth of 13% to $20.9 billion in its latest Q4 FY21 report. This revenue was also an increase from what the company recorded in the previous quarter. Net income also grew YoY by 86% to $5.75 billion. In addition, the profit margin recorded for the same quarter was 26.48%, which is more than what the company has received in a while.
The simple interpretation of those figures is that Wells Fargo & Company is not only solid but also growing. Its Return on Equity for that quarter (12%) was just as strong as the other major banks, Bank of America and Citigroup. This means the bank is now competing among the best again.
Now that most of the headwinds the bank is facing are external, such as the pandemic and federal monetary policies, it is safe to say Wells Fargo stock can be worth more than it is in the next 5 years.
Technical Analysis
What’s going on with the WFC stock is beyond mere support and resistance this time around. It’s about breaking out of the resistance line of an uptrend price channel, thereby showing a stronger bullish sentiment.
Although the entire formation is just taking shape, there are reasons to believe there’s something interesting going on with the WFC stock.
The level where the breakout occurred coincides with the $50 – $52 support/resistance level. And a retest of this level has appeared, with the price having outshot its most recent high by 2.35%.
So does this mean WFC stock is going to keep soaring from here? Not yet. There’s still another hurdle to cross at the $58 – $60 resistance level. Whatever WFC price does between and around these levels is going to determine whether the bullish run will continue, at least for now.
In the short term, though, we recommend that you hold the WFC stock. A breakout of the $58 – $60 resistance level unleashes a bullish sentiment with an entry point above the resistance level. But until then, there’s nothing to do as we speak on this stock. Long term, however, we believe there’s still more upside to WFC over the coming years.
