Wells Fargo Corporate Bonds and Leverage Analysis

WFC -  USA Stock  

USD 41.75  0.13  0.31%

Wells Fargo's financial leverage is the degree to which the firm utilizes its fixed-income securities and uses equity to finance projects. Companies with high leverage are usually considered to be at financial risk. Wells Fargo's financial risk is the risk to Wells Fargo stockholders that is caused by an increase in debt. In other words, with a high degree of financial leverage come high-interest payments, which usually reduce Earnings Per Share (EPS).
Check out the analysis of Wells Fargo Fundamentals Over Time.

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Wells Fargo Total Debt is projected to increase significantly based on the last few years of reporting. The past year's Total Debt was at 316.67 Billion. The current year Issuance Repayment of Debt Securities is expected to grow to about 52.9 B, whereas Long Term Debt is forecasted to decline to about 192.3 B.
Given the importance of Wells Fargo's capital structure, the first step in the capital decision process is for the management of Wells Fargo to decide how much external capital it will need to raise to operate in a sustainable way. Once the amount of financing is determined, management needs to examine the financial markets to determine the terms in which the company can boost capital. This move is crucial to the process because the market environment may reduce the ability of Wells Fargo to issue bonds at a reasonable cost.

Wells Fargo Bond Ratings

Wells Fargo bond ratings play a critical role in determining how much Wells Fargo have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Wells Fargo's borrowing costs.
Overall Bond Rating
Very Good
Average S&P Rating
A-
Piotroski F Score
3  Frail
Beneish M Score

Wells Fargo Debt to Cash Allocation

As Wells Fargo follows its natural business cycle, the capital allocation decisions will not magically go away. Wells Fargo's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors. Many companies eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
The company has 257.16 B in debt with debt to equity (D/E) ratio of 8.26, demonstrating that the company may be unable to create cash to meet all of its financial commitments.

Wells Fargo Long Term Debt Over Time

Wells Fargo Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Wells Fargo uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.

Wells Fargo Debt Ratio

    
  19.6   
It appears most of the Wells Fargo's assets are financed through equity. Typically, companies with high debt-to-asset ratios are said to be highly leveraged. The higher the ratio, the greater risk will be associated with the Wells Fargo's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Wells Fargo, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a Wells Fargo debt ratio should be compared their industry average or other competing firms.
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Wells Fargo Corporate Bonds Issued

Wells Fargo issues bonds to finance its operations. Corporate bonds make up one of the most significant components of the U.S. bond market and are considered the world's largest securities market. Wells Fargo uses the proceeds from bond sales for a wide variety of purposes, including financing ongoing mergers and acquisitions, buying new equipment, investing in research and development, buying back their own stock, paying dividends to shareholders, and even refinancing existing debt. Most WFC Wells bonds can be classified according to their maturity, which is the date when Wells Fargo has to pay back the principal to investors. Maturities can be short-term, medium-term, or long-term (more than ten years). Longer-term bonds usually offer higher interest rates but may entail additional risks.
Issue DateMaturityCouponRef Coupon  Rating
FIRST UN CORP04/26/199504/15/20357.55.375
A
FIRST UN CORP10/18/199510/15/20356.555.375
A
WFC Wells 1115202911/15/199911/15/20297.952.25
BBB
WFC Wells 1015202310/25/199310/15/20236.652.25
A
WFC Wells 1215202712/23/199712/15/20276.752.25
A+
WFC Wells 0515202505/09/199505/15/20257.692.25
A+
WFC Wells 1215202712/12/199712/15/20276.5652.25
A+
WFC Wells 0109202801/09/199801/09/20286.1252.25
NA
WFC Wells 0515202505/09/199505/15/20257.742.25
A+
WFC Wells 0201203701/30/200702/01/20375.855.375
A+
WFC Wells 0115203812/03/200701/15/20386.65.375
A+
WACHOVIA CORP OLD10/05/199510/01/20256.6052.25
A
WACHOVIA CORP NEW08/01/200508/01/20355.55.375
A
WELLS FARGO NEW02/07/200502/07/20355.3755.375
A+
WELLS FARGO NEW02/05/201401/16/20244.482.25
A
WELLS FARGO NEW02/05/201401/15/20445.6063.0
A
WELLS FARGO NEW03/08/201203/08/20223.52.0
A+
WELLS FARGO NEW02/13/201302/13/20233.452.25
A
WELLS FARGO NEW08/15/201308/15/20234.1252.25
A
WELLS FARGO NEW10/28/201311/02/20435.3753.0
A
WELLS FARGO NEW06/03/201406/03/20264.12.25
A
WELLS FARGO NEW09/09/201409/09/20243.32.25
A+
WELLS FARGO NEW11/04/201411/04/20444.653.0
A
WELLS FARGO BK08/30/200608/26/20365.955.375
A+
WFC Wells 1115202711/15/201211/15/20273.252.25
A+

Wells Fargo Historical Liabilities

While analyzing the current debt level is an essential aspect of forecasting the current year budgeting needs of Wells Fargo, understanding its historical liability is critical in projecting Wells Fargo's future earnings, especially during periods of low and high inflation and deflation. Many analysts look at the trend in assets and liabilities and evaluate how Wells Fargo uses its financing power over time.

Understaning Wells Fargo Use of Financial Leverage

Wells Fargo financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures Wells Fargo's total debt position, including all of outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Wells Fargo assets, the company is considered highly leveraged. Understanding the composition and structure of overall Wells Fargo debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business and if it is worth investing in it.
Please read more on our technical analysis page.
Last ReportedProjected for 2021
Long Term Debt212.9 B192.3 B
Total Debt316.7 B341.7 B
Issuance Repayment of Debt Securities49 B52.9 B
Debt to Equity Ratio 1.15  1.06 
Wells Fargo Company is a leading financial services company that has approximately 1.9 trillion in assets and proudly serves one in three U.S. households and more than 10 percent of all middle market companies in the U.S. In the communities we serve, the company focuses its social impact on building a sustainable, inclusive future for all by supporting housing affordability, small business growth, financial health and a low-carbon economy. Wells Fargo operates under BanksDiversified classification in the United States and is traded on New York Stock Exchange. It employs 264513 people.

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The market value of Wells Fargo is measured differently than its book value, which is the value of WFC 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 underlying business (such as 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.