I hate to say I told you so…but I did.
“Wells Fargo continued to strengthen its franchise during the second quarter,” said President and CEO John Stumpf. “Earnings per share were 14 cents below that of last year due to $2.3 billion of higher provision expense, including a credit reserve build of $1.5 billion (30 cents per share). We were able to lend more to current customers where we believed it was prudent and properly priced. We grew core deposits while reducing funding costs. We achieved record crosssell results with our retail and commercial customers – a testament to our relationship based strategy and our 160,000 team members who serve our customers. We are open for business and getting lots of it. We also continued to benefit from opportunities in this environment to gain new business and customers through selective acquisitions. We maintained a strong balance sheet and, for the 21st consecutive year, increased our dividend. We’re still affected by the weak economy, but we believe we’re one of the best positioned in financial services to grow through this adversity and to build an even stronger company for our team members, customers, communities and shareholders.”
WFC looked to be bottoming out to this investor and I promptly snatched up 200 shares at 23.70 two weeks ago. Since then the stock slid to an all time low of $20.40 but that corrected today as the stock was up $4+ in intraday trading. I see no reason for any slowdown and when companies increase their dividend that’s a good sign they believe things will continue to strengthen.
I’d like to see WFC at $30 before the end of summer if the momentum can keep up, but even then long term it’s fairly priced at $60. Two years ago the company split the stock when it was in the mid $70s and it’s been steadily declining mainly due to the housing crisis and credit crunch that has destroyed smaller banks. This is the only financial company I own in my portfolio.
Find out what I am doing right now by following me on Twitter! If you like this post then please consider subscribing to my full feed RSS. You can also subscribe by Email and have new posts sent directly to your inbox.
