Is Wells Fargo volatility declining?
 | By Gabriel Shpitalnik | Macroaxis Story |
Steady as she goes might just be the mantra for Wells Fargo's stock these days. With a valuation real value of $68 and a market value hovering around $63.11, the stock appears to be inching towards stability. Analysts are largely optimistic, with a consensus rating of "Buy" and a target price estimated at $77.30. While the daily balance of power shows a slight negative at -0.92, indicating some short-term volatility, the overall sentiment remains positive. The stock's potential upside price of $59.53 suggests room for growth, even as the period momentum indicator sits at -3.22. With strong buy recommendations from nine analysts, Wells Fargo seems to be on a path to becoming a more reliable investment, despite the occasional bumps along the way. Wells Fargo's stock is less volatile than 22% of other stocks, yet over 99% of equities are projected to outperform it in the next 90 days. While some cautious investors might be overthinking the banking sector, it's worth taking a closer look at Wells Fargo. We'll explore the risks of investing in Wells Fargo right now. Despite its low volatility, we believe the stock is undervalued. Our analysis suggests its true value is nearing $68 per share.
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Reviewed by Rifka Kats
Wells Fargo holds approximately $358.38 billion in cash and generates a positive cash flow of $3.04 billion from its operations. This translates to a cash-per-share (CPS) ratio of 94.05.
Main Points
When considering Wells Fargo's stock from a volatility perspective, it's worth noting that the variance stands at 5.98, indicating moderate fluctuations in its price movements. This level of variance suggests that while the stock does experience some ups and downs, it may be stabilizing compared to more volatile options. With a trading volume of 29M shares today, investor interest remains robust, which could further contribute to its potential as a more stable investment opportunity.Volatility is a rate at which the price of Wells Fargo or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Wells Fargo may increase or decrease. In other words, similar to Wells's beta indicator, it measures the risk of Wells Fargo and helps estimate the fluctuations that may happen in a short period of time. So if prices of Wells Fargo fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page.
How important is Wells Fargo's Liquidity
Wells Fargo financial leverage refers to using borrowed capital as a funding source to finance Wells Fargo ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Wells Fargo financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Wells Fargo's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Wells Fargo's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Wells Fargo's total debt and its cash.
Wells Fargo Gross Profit
Wells Fargo Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Wells Fargo previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Wells Fargo Gross Profit growth over the last 10 years. Please check Wells Fargo's gross profit and other fundamental indicators for more details.
Wells Fargo Volatility Drivers
Wells Fargo unsystematic risk is unique to Wells Fargo and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in Wells Fargo you can also buy Pfizer Inc. You can also mitigate this risk by investing in the financials sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing Wells Fargo important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in Wells Fargo income statement and balance sheet. Here are more details about Wells volatility.Click cells to compare fundamentals
What is driving Wells Fargo Investor Appetite?
The entity reported the last year's revenue of 77.96 B. Total Income to common stockholders was 19.72 B with profit before taxes, overhead, and interest of 77.96 B. A smooth sea never made a skilled sailor, and the same can be said for navigating the stock market. Wells Fargo's stock, with a beta of 1.01, suggests it moves almost in tandem with the market, indicating a level of stability. However, the probability of bankruptcy at 45.04% raises some eyebrows, hinting at underlying risks. Despite these concerns, the bank's robust net income of 19.72 billion dollars and a price-to-earnings ratio of 12.32X suggest that it remains a solid player in the diversified banking industry. Investors should weigh these factors carefully to determine if Wells Fargo aligns with their risk tolerance and investment goals.
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This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Gabriel Shpitalnik do not own shares of Wells Fargo. Please refer to our Terms of Use for any information regarding our disclosure principles.