Is Wells Fargo Stock Underperforming the S&P 500?

Wells Fargo & Company (WFC), headquartered in San Francisco, California, is a leading financial services company specializing in banking, investment, and mortgage products and services. With a market cap of $203.50 billion, WFC is a significant player in the financial sector, offering a wide range of services, including consumer and commercial banking, wealth management, and investment banking. Competing with other financial giants like JPMorgan Chase & Co. (JPM), Wells Fargo focuses on enhancing customer experience, digital innovation, and operational efficiency to drive growth and adapt to evolving market dynamics across global financial markets.

Companies valued at $200 billion or more are classified as "mega-cap" stocks, and Wells Fargo falls right into this category, highlighting its significant scale, stability, and influence in the global financial services industry. As one of the leading financial institutions in the U.S., Wells Fargo demonstrates the strength and resilience of a large-cap company, driven by its comprehensive range of banking and financial products, consistent market presence, and focus on digital innovation and customer-centric strategies.

WFC shares are trading 7.1% below their 52-week high of $62.55, which they hit on Mar. 15. WFC has declined marginally over the past three months, underperforming the broader S&P 500 Index ($SPX), which has gained 4.3% over the same time frame.

In the longer term, WFC is up 18.1% on a YTD basis, and the shares have gained 39.5% over the past 52 weeks. In comparison, the SPX has gained 15.7% in 2024 and rallied 22.2% over the past year.

WFC has been trading above its 50-day moving average since mid-August and its 200-day moving average since early November 2023, confirming its bullish trend.

On Jul. 12, WFC reported its Q2 results. Its EPS of $1.33 beat the consensus estimate of $1.27. Its revenue, net of interest expense, was $20.69 billion, higher than the Wall Street estimates of $20.27 billion. However, Wells Fargo’s stock declined approximately 6%, making it the biggest percentage loser on the S&P 500. Higher-than-expected expenses primarily disappointed investors.

Highlighting the contrast in performance, WFC's competitor, JPM, has significantly outperformed the stock and the SPX. JPM has gained 28.9% on a YTD basis.

Analysts are moderately optimistic about WFC's prospects despite the weak price performance. The stock has a consensus rating of "Moderate Buy" from 25 analysts. The mean price target of $62.91 reflects an 8.2% premium over current levels.

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On the date of publication, Rashmi Kumari did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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