Wells Beneish M Score

WFC
 Stock
  

USD 39.92  0.75  1.91%   

This module uses fundamental data of Wells Fargo to approximate the value of its Beneish M Score. Wells Fargo M Score tells investors if the company management is likely to be manipulating earnings. The score is calculated using eight financial indicators that are adjusted by a specific multiplier. Please note, the M Score is a probabilistic model and cannot detect companies that manipulate their earnings with 100% accuracy. Check out Wells Fargo Piotroski F Score and Wells Fargo Altman Z Score analysis.
  
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The current year Long Term Debt is expected to grow to about 163.8 B. The current year Total Debt is expected to grow to about 341.7 B. Wells Fargo Calculated Tax Rate is projected to decrease significantly based on the last few years of reporting. The past year's Calculated Tax Rate was at 19.36. The current year Cash and Equivalents Turnover is expected to grow to 0.34, whereas PPandE Turnover is forecasted to decline to 9.21.
At this time, it appears that Wells Fargo is an unlikely manipulator. The earnings manipulation may begin if Wells Fargo's top management creates an artificial sense of financial success, forcing the stock price to be traded at a high price-earnings multiple than it should be. In general, excessive earnings management by Wells Fargo executives may lead to removing some of the operating profits from subsequent periods to inflate earnings in the following periods. This way, the manipulation of Wells Fargo's earnings can lead to misrepresentations of actual financial condition, taking the otherwise loyal stakeholders on to the path of questionable ethical practices and plain fraud.
-3.7
Beneish M Score - Unlikely Manipulator
Elasticity of ReceivablesN/AFocus
Asset QualityN/AFocus
Expense Coverage0.82Focus
Gross Margin Strengs0.99Focus
Accruals Factor0.82Focus
Depreciation Resistance1.06Focus
Net Sales Growth0.99Focus
Financial Leverage Condition1.03Focus

Wells Fargo Beneish M-Score Indicator Trends

The cure to earnings manipulation is the transparency of financial reporting. It will typically remove the temptation of the top executives to inflate earnings (i.e., to promote the idea of 'winning at any cost'). Because a healthy internal audit department can enhance transparency, the board should promote the auditors' access to all the record-keeping systems across the enterprise. For example, if Wells Fargo's auditors report directly to the board (not management), the managers will be reluctant to manipulate simply due to the fear of punishment. On the other hand, the auditors will be free to investigate the ledgers properly because they know that the board has their back.
Current ValueLast YearChange From Last Year 10 Year Trend
Revenues81.9 B82.4 B
Slightly Down
Decreasing
Stable
Selling General and Administrative Expense27.1 B33.2 B
Significantly Down
Increasing
Slightly volatile
Net Cash Flow from Operations(11.8 B)(11.5 B)
Fairly Down
Decreasing
Slightly volatile
Depreciation Amortization and Accretion4.8 B5.7 B
Fairly Down
Increasing
Slightly volatile
Total Assets1748.3 B1948.1 B
Moderately Down
Increasing
Slightly volatile
Investments1450.5 B1344.4 B
Significantly Up
Increasing
Slightly volatile
Property Plant and Equipment NetB7.5 B
Significantly Down
Increasing
Very volatile
Total Liabilities1574.7 B1760.5 B
Moderately Down
Increasing
Slightly volatile
Total Debt341.7 B316.7 B
Significantly Up
Increasing
Slightly volatile
Operating Income23.1 B28.9 B
Significantly Down
Increasing
Slightly volatile
Gross Margin0.890.9
Fairly Down
Decreasing
Slightly volatile

Wells Fargo Beneish M-Score Driver Matrix

One of the toughest challenges investors face today is learning how to quickly synthesize historical financial statements and information provided by the company, SEC reporting, and various external parties in order to detect the potential manipulation of earnings. Understanding the correlation between Wells Fargo's different financial indicators related to revenue, expenses, operating profit, and net earnings helps investors identify and prioritize their investing strategies towards Wells Fargo in a much-optimized way. Analyzing correlations between earnings drivers directly associated with dollar figures is the most effective way to find Wells Fargo's degree of accounting gimmicks and manipulations.

About Wells Fargo Beneish M Score

M-Score is one of many grading techniques for value stocks. It was developed by Professor M. Daniel Beneish of the Kelley School of Business at Indiana University and published in 1999 under the paper titled The Detection of Earnings Manipulation. The Beneish score is a multi-factor model that utilizes financial identifiers to compile eight variables used to classify whether a company has manipulated its reported earnings. The variables are built from the officially filed financial statements to create a final score call 'M Score.' The score helps to identify companies that are likely to manipulate their profits if they show deteriorating gross margins, operating expenses, and leverage against growing revenue.

Operating Expenses

39.12 Billion

Share
Wells Fargo Operating Expenses is projected to increase significantly based on the last few years of reporting. The past year's Operating Expenses was at 47.14 Billion

Wells Fargo Earnings Manipulation Drivers

Although earnings manipulation is typically not the result of intentional misconduct by the c-level executives, it is still a widespread practice by the senior management of public companies such as Wells Fargo. It is usually done by a series of misrepresentations of various accounting rules and operating activities across multiple financial cycles. The best way to spot the manipulation is to examine the historical financial statement to find inconsistencies in earning reports to find trends in assets or liabilities that are not sustainable in the future.
201720182019202020212022 (projected)
Revenues97.74 B101.06 B103.92 B80.3 B82.41 B81.9 B
Total Assets1,951.76 B1,895.88 B1,927.56 B1,955.16 B1,948.07 B1,748.29 B
Total Liabilities1,744.82 B1,699.72 B1,740.41 B1,770.28 B1,760.46 B1,574.67 B
Net Cash Flow from Operations18.72 B36.07 B6.73 B2.05 B(11.53 B)(11.83 B)

About Wells Fargo Fundamental Analysis

The Macroaxis Fundamental Analysis modules help investors analyze Wells Fargo's financials across various querterly and yearly statements, indicators and fundamental ratios. We help investors to determine the real value of Wells Fargo using virtually all public information available. We use both quantitative as well as qualitative analysis to arrive at the intrinsic value of Wells Fargo based on its fundamental data. In general, a quantitative approach, as applied to this company, focuses on analyzing financial statements comparatively, whereas a qaualitative method uses data that is important to a company's growth but cannot be measured and presented in a numerical way.
Please read more on our fundamental analysis page.
Wells Fargo Company, a diversified financial services company, provides banking, investment, mortgage, and consumer and commercial finance products and services in the United States and internationally. Wells Fargo Company was founded in 1852 and is headquartered in San Francisco, California. Wells Fargo operates under BanksDiversified classification in the United States and is traded on New York Stock Exchange. It employs 246577 people.

Wells Fargo Investors Sentiment

The influence of Wells Fargo's investor sentiment on the probability of its price appreciation or decline could be a good factor in your decision-making process regarding taking a position in Wells. The overall investor sentiment generally increases the direction of a stock movement in a one-year investment horizon. However, the impact of investor sentiment on the entire stock markets does not have a solid backing from leading economists and market statisticians.

Wells Fargo Implied Volatility

    
  32.33  
Wells Fargo's implied volatility exposes the market's sentiment of Wells Fargo stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Wells Fargo's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Wells Fargo stock will not fluctuate a lot when Wells Fargo's options are near their expiration.
Some investors attempt to determine whether the market's mood is bullish or bearish by monitoring changes in market sentiment. Unlike more traditional methods such as technical analysis, investor sentiment usually refers to the aggregate attitude towards Wells Fargo in the overall investment community. So, suppose investors can accurately measure the market's sentiment. In that case, they can use it for their benefit. For example, some tools to gauge market sentiment could be utilized using contrarian indexes, Wells Fargo's short interest history, or implied volatility extrapolated from Wells Fargo options trading.

Current Sentiment - WFC

Wells Fargo Investor Sentiment

Predominant part of Macroaxis users are at this time bullish on Wells Fargo. What is your outlook on investing in Wells Fargo? Are you bullish or bearish?
Bullish
Bearish
98% Bullish
2% Bearish

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Check out Wells Fargo Piotroski F Score and Wells Fargo Altman Z Score analysis. Note that the Wells Fargo information on this page should be used as a complementary analysis to other Wells Fargo's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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Is Wells Fargo's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Wells Fargo. If investors know Wells will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Wells Fargo listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth YOY
-0.14
Market Capitalization
151.3 B
Quarterly Revenue Growth YOY
-0.061
Return On Assets
0.0115
Return On Equity
0.12
The market value of Wells Fargo is measured differently than its book value, which is the value of Wells that is recorded on the company's balance sheet. Investors also form their own opinion of Wells Fargo's value that differs from its market value or its book value, called intrinsic value, which is Wells Fargo's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Wells Fargo's market value can be influenced by many factors that don't directly affect Wells Fargo's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Wells Fargo's value and its price as these two are different measures arrived at by different means. Investors typically determine Wells Fargo value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Wells Fargo's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.