Tuesday, February 7, 2017

Wells Fargo Has Dug Itself Into A Hole, But It Won't Be There Forever

Sooner or later, Wells Fargo (NYSE:WFC) will move beyond its current set of problems (many of which are/were self-inflicted) and get back to the business of generating attractive returns from an exceptional retail banking franchise. The problem with "sooner or later", though, is that later can sometimes be a lot later, and there's a not-so-fine line between investing with a long-term focus on living in denial.

Certainly there are a lot of things going against Wells Fargo right now, but the bank is not falling apart and the new administration's policies are likely to be good for banks and could be particularly good for a more "regulatory-challenged" bank like Wells Fargo. These shares actually look slightly undervalued on the basis of mid single-digit long-term earnings growth, but of course there is the risk that these recent problems cause greater long-term problems than I assume.

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Wells Fargo Has Dug Itself Into A Hole, But It Won't Be There Forever

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