Weak Core Growth Remains The Theme At Wells Fargo

It’s still early in the reporting cycle, but Wells Fargo (WFC) looks like it will once again be on the wrong side of average when it comes to growth in revenue, core earnings, loans and the like. While the self-inflicted messes of Wells Fargo’s multiple scandals certainly aren’t helping, this is an issue that goes back several years and reflects ongoing challenges in growing this huge retail bank.

Although Wells Fargo shares do look undervalued on the basis of mid-to-high single-digit earnings growth (helped by a lower tax rate), you have to believe that the company will be able to hit its goals with respect to cost reductions and get its loan/earning asset growth going again. I think it will probably take a couple more quarters, but I do expect Wells Fargo to post better growth rates in the second half of 2018. With few undervalued options in the space, the risk/reward may be worthwhile here, though Wells Fargo still has work to do to restore its reputation with investors and customers.

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Weak Core Growth Remains The Theme At Wells Fargo