Big-picture thinking is fine. However, when it comes to Wells Fargo’s (WFC) latest round of financial results, the devil is in the details, as the old saying goes. As Wells Fargo shares push toward all-time highs, I am neutral on WFC stock because Wells Fargo’s top-line and bottom-line figures are actually contracting, not expanding, and that’s a cause for concern.

Wells Fargo is a banking giant in the U.S. Consequently, Wells Fargo is highly sensitive to interest rates. That’s a mixed blessing since interest rates are coming down now, and this means borrowing activity will probably pick up, but Wells Fargo will likely have to lower its interest rates on loans.

Frankly, it’s difficult to predict how interest-rate changes will ultimately affect Wells Fargo. What we can do right now, however, is examine Wells Fargo’s recently released data points and how the market responded to that data. I propose that some investors are too optimistic now, especially based on the actual facts that are currently available to the public.

A Note about Wells Fargo’s Valuation

If you’re looking through TipRanks’ Analysis page for Wells Fargo, which I highly recommend, you might notice Wells Fargo’s price-to-earnings (P/E) ratio. From that, you may conclude that the company’s valuation is quite low, and therefore, it’s a great time to load the boat on WFC stock. However, don’t make any hasty investment decisions.

First of all, Wells Fargo’s GAAP-measured trailing 12-month (TTM) P/E ratio is 12.74x, which is lower than the sector median of 13.48x but not by a very wide margin. If we use non-GAAP measurements, Wells Fargo’s TTM P/E ratio is 11.42x versus the sector median of 12.25x. In other words, Wells Fargo’s valuation might be moderately more favorable than the median, but we’re not talking about a “screaming buy” or a once-in-a-lifetime bargain here.

Besides, I invite you to check the stock price chart for Wells Fargo. This tells a tale that the P/E ratio doesn’t. WFC stock jumped 5.61% to $60.99 on Friday, followed by 2% more at the time of writing. This stock is up by more than 50% over the past 12 months. Unless Wells Fargo’s recent financial results are across-the-board spectacular – and in a moment, we’ll discover that they’re not – it’s probably time to take profits, not add to your share position.

Wells Fargo’s Bottom-Line Stats

The good news about Wells Fargo’s bottom-line stats in 2024’s third quarter is that the company reported earnings of $1.42 per share, thereby beating Wall Street’s consensus estimate of $1.28 per share. On the other hand, this still marks a decline when compared to the $1.48 per share that Wells Fargo had earned in the year-ago quarter.