3). Growth in Value of Commercial Loans: A major business segment Wells Fargo operates is commercial loans, which makes up 8.27% of overall business, and the value of commercial loans has grown from $106 billion in 2008 to $202 billion currently, and further growth in this statistic could present an incredible opportunity for the company
4). Asset Management & Brokerage: 16.65% of overall business is concentrated in asset management and brokerage, with commission and fees in this segment growing from $6.15 billion in 2009 to $8.13 billion currently, and further growth could present incredible opportunity to the company
Threats:
1). Government Regulation: Any government regulation that restricts Wells Fargo’s ability to expand efficiently could pose a major threat to the company
2). Looming Financial Settlements: The dust from the financial collapse is still settling, and there are still major looming financial settlements hanging over the company which could cost billions in lost profit
Competitors:
Major publicly traded competitors of Wells Fargo include JPMorgan Chase & Co. (NYSE:JPM), U.S. Bancorp (NYSE:USB), Goldman Sachs Group, Inc. (NYSE:GS), and Morgan Stanley (NYSE:MS). All of these companies operate in the same industries as Wells Fargo and compete directly with the company. J.P. Morgan Chase is valued at $185.94 billion, pays out a dividend yielding 2.45%, and carries a price earnings ratio of 9.40. US Bancorp is valued at $63.38 billion, pays out a dividend yielding 2.30%, and carries a price earnings ratio of 11.94. Goldman Sachs is valued at $72.84 billion, pays out a dividend yielding 1.29%, and carries a price earnings ratio of 10.95. Morgan Stanley is valued at $47.12 billion, pays out a dividend yielding 0.84%, and carries a negative price earnings ratio.
The Foolish Bottom Line:
Financially, Wells Fargo is not too great, but not terrible either. The company possesses historic revenue growth, a double digit profit margin, and a growing dividend. However, the company possesses a negative free cash flow position and a rather substantial debt load. There is no lack of confidence from the institutional world in Wells Fargo, and compared to its peers Wells Fargo is prospering and strong. All in all, Wells Fargo is an extremely diversified business that has been in operation for 160 years, and should continue to deliver solid returns for the coming decades.
The article 160 Years in Business and Still Going Strong originally appeared on Fool.com and is written by Ryan Guenette.
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