Stock: WFC
Rating: Good
Author: Waleed M. Tariq
Heading
- WFC stock has outperformed BOA, JPM, and GS during the past year.
- S&P 500 performs better during Fed rate hikes than rate cuts or normal times.
- I’m positive on the stock because of economic growth.
Bullish
- Due to the economy’s comeback, rate hikes, and cost-cutting, Wells Fargo expects significant top- and bottom-line growth.
- Wells Fargo shares topped competitors with a 52-week and YTD rise of almost 1%.
- WFC can use its huge U.S. presence, powerful operations, and investment banking and wealth management offerings.
- The company can optimize its resource use and returns.
Bearish
- The company has some legal concerns that must be addressed otherwise they will cripple their flourishing business.
Rate hikes and profits
- Loan-interest income and deposit-interest expenses boost earnings. Higher rates improve loan, mortgage, and credit card income.
- S&P 500 performs better during Fed rate hikes than rate cuts or normal times.


Improving efficiency ratio
- Removing administrative layers, automating lending procedures, streamlining branches, and decreasing office real estate costs dropped MRQ expenses from $57.6 bn in 2020 to $53.8 bn in 2021.
- Q4 2021 efficiency ratio fell 9 percent to 69 percent. The corporation costs $69 to make $100, or 69%.

Dividends
- The company raised its dividend from $0.10 to $0.20 to $0.25 in 2021.
- Investors can expect share buybacks and dividend increases in 2022.
Conclusion
- The financial services sector, especially banks, is bullishly influenced by the economic resurgence and interest rate hikes and thus WFC is a nice addition to ones portfolio.