I'm trying to get better at analyzing stocks by watching your methods closely. Can you offer any thoughts regarding Wells Fargo (WFC)?

Here is what I've noted as positive so far: 1) Forward and trailing P/E ratios are good at 12.5 and 13.58 respectively. 2) Market cap is huge at 273.66 B. 3) They have a ton of cash in the amount of $380.51 B. 4) Earnings projections look good. 5) Their stock price is not far from the 50-week moving average.

Here is what I've noted as negative: 1) They have 345.86 B in debt, which is larger than their market cap (I'm not totally sure that this is negative, because they have more cash than debt). 2) Their RSI is in the oversold region. 3) They have to pay a 142 million dollar settlement, although this doesn't seem like much in light of the fact that they are earning billions.

Do I have all of the essential details? If so, it seems there is more positive here than negative. But this is where I get out of the way and listen to you explain what this novice has missed. Ha ha.

Comments (5)
No. 1-5
shmcc2000
shmcc2000

Editor

Bank stocks are the hardest to assess fundamentally because all of the cash on their books is not really theirs, etc. So it's hard to truly assess some of their most important fundamentals. With that said, WFC has enjoyed a run-up from $6 to almost $60. So...given their hard to assess fundamentals and the fact that they're in wave 5, I'm not interested in getting into it.

Natediggity
Natediggity

Thanks. Appreciate your comments. I was having a hard time counting the waves on their chart, but the image you posted helps. I'm not considering buying it, nor would I ever suggest a stock for you to buy. I'm just trying to learn by using WFC as a prop. To that end...I guess there is more to understanding the fundamentals of a bank stock than other stocks. Thanks again.

shmcc2000
shmcc2000

Editor

Weekly charts that go back to the last major low helps. That way you can see where wave C ends, which is where wave 1 begins. Wave 1's aren't always as "clean" as the other waves are...so they can be tougher to decipher at times. But the wave 2 pullback is usually easier to see (and a better place to enter anyway).

shmcc2000
shmcc2000

Editor

Yes, bank stocks are complex. Many pros even avoid them because of their "hard to decipher" fundamentals due to the way banks can record stuff on their balance sheets. If the P/E's are low, the stock hasn't run up with the market and its in a favorable wave count with negative sentiment...that's when it would likely appeal to me. And it would have to be one of probably five or so of the largest banks in the U.S.

Natediggity
Natediggity

Makes sense and very helpful. Much appreciated.



shmcc2000
shmcc2000
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