Wells Fargo & Co (WFC): This High Quality Bank Is Still a Buy at All-time Highs

Wells Fargo leaves its competitors in the dust when it comes to profitability too: it has a return on assets of 1.4% and return on equity of 13.6%. Bank of America in comparison has a ROA of 0.2% and ROE of 1.6% and Citigroup makes 0.4% in ROA and 4.4% in ROE.

The bank is more expensive than its peers when it comes to price to book value, although P/E and forward P/E look quite favorable for Wells Fargo considering its superior quality. Besides, it´s the only one in the group with an attractive dividend yield. In any case, a valuation premium for Wells Fargo & Co (NYSE:WFC) versus Bank of America Corp (NYSE:BAC) and Citigroup Inc (NYSE:C) is clearly justified.

Wells Fargo is firing on all cylinders judging by financial results in the last quarter. Net income of $5.2 billion was a historical record for the company, and represented an increase of 20% versus the second quarter in 2012. Loans and deposits are also growing, and the bank enjoys a considerably lower percentage of delinquent loans than its peers.

If earnings are higher than ever, and perspectives are looking good over the middle and long term, the fact that the stock is at all-time highs should be no reason for concern.

Bottom line

Wells Fargo is stronger than ever, not only in terms of financial performance, but also when it comes to its strategic competitive position in the industry. The fact that the stock is trading at historical highs shouldn´t be a problem for investors since its valuation is still quite reasonable. Winners keep on winning, and Wells Fargo & Co (NYSE:WFC) certainly looks like a winner.

The article This High Quality Bank Is Still a Buy at All-time Highs originally appeared on Fool.com and is written by Andrés Cardenal.

Andrés Cardenal has no position in any stocks mentioned. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup Inc (NYSE:C) , and Wells Fargo. Andrés is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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