WELLS FARGO & CO. $50 - New York symbol WFC

WELLS FARGO & CO. $50 (New York symbol
WFC; Conservative Growth and Income Portfolios,
Finance sector; Shares outstanding: 5.3 billion;
Market cap: $265.0 billion; Price-to-sales ratio: 3.2;
Dividend yield: 2.8%; TSINetwork Rating: Average;
www.wellsfargo.com) saw its revenue fall 3.0% in the
first quarter of 2014, to $20.6 billion from $21.3
billion a year ago. Interest rates have crept up, which
has dampened demand for new mortgages and led
fewer homeowners to refinance.

However, the bank continues to do a good job of
screening potential borrowers. As a result, it has been
setting aside less money to cover bad loans. In the
latest quarter, Wells Fargo’s loan-loss provisions fell
73.3%, to $325 million from $1.2 billion. The bank is
also cutting jobs at its mortgage business in response to
slowing demand.

Thanks to these measures, its earnings in the latest
quarter rose 14.0%, to $5.9 billion, or $1.05 a share. It
earned $5.2 billion, or $0.92 a share, a year earlier.

Wells Fargo will likely earn
$4.05 a share in 2014, and the
stock trades at 12.3 times that
forecast.

The bank also raised its quarterly
dividend by 16.7% to $0.35
a share. The new annual rate of
$1.40 yields 2.8%.

Wells Fargo is a buy.

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