Wells Fargo & Company (WFC) Discounted Future Market Cap

Wells Fargo & Company

WFC (NYSE)

(%)

Valuation
Wells Fargo & Company Discounted Future Market Cap

"""
    Model: Discounted Future Market Cap

# Render model description
model.render_description(r"""
## Discounted Future Market Cap

This model estimates the intrinsic value of a common share by projecting the Future Market Capitalization using the estimated PE Ratio and then discounting it to the Present using an Annual Required Rate of Return.
""")

# Initialize assumptions
assumptions.init({
    "data": {
        "%discount_rate": None,
        "beta": data.get("profile:beta", default=1),
        "%risk_free_rate": data.get("treasury:year10"),
        "%market_premium": data.get("risk:totalEquityRiskPremium"),
        "pe_ratio": data.get("ratio:priceEarningsRatio"),
        "%revenue_growth_rate": None,
        "%net_income_margin": None,
        "historical_years": 10,
        "projection_years": 5,
    },
    "hierarchies": [{
        "parent": "%discount_rate",
        "children": ["beta", "%risk_free_rate", "%market_premium"]
    }]
})

# Calculate cost of equity
cost_of_equity = assumptions.get("%risk_free_rate") + assumptions.get("beta") * assumptions.get("%market_premium")
assumptions.set("%discount_rate", cost_of_equity)

# Compute metrics
data.compute({
    "%grossMargin": "income:grossProfit / income:revenue",
    "%operating_margin": "income:operatingIncome / income:revenue",
    "%netMargin": "income:netIncome / income:revenue",
    "%revenueGrowthRate": "function:growth:income:revenue",
    "%netIncomeGrowthRate": "function:growth:income:netIncome",
    "%totalStockholdersEquityGrowthRate": "function:growth:balance:totalStockholdersEquity",

# Calculating NOPAT (Net Operating Profit After Taxes)
    "%taxRate": "income:incomeTaxExpense / income:incomeBeforeTax",
    "incomeTax": "income:operatingIncome * %taxRate",
    "nopat": "income:operatingIncome - incomeTax",

# Calculating Invested Capital
    "investedCapital": [
        "balance:totalNonCurrentAssets", "-", "balance:cashAndCashEquivalents", "+",
        "balance:totalCurrentAssets", "-", "balance:totalCurrentLiabilities"
    ],
    "%roic": "nopat / investedCapital",
})

data.set_default_range(f"{-assumptions.get('historical_years')}->0")

assumptions.set("%net_income_margin", data.average(f"%netMargin"))
assumptions.set_bounds(
    "%net_income_margin", low=0, high="100%"
)

assumptions.set("%revenue_growth_rate", data.average(f"%revenueGrowthRate"))
assumptions.set_bounds(
    "%revenue_growth_rate", low=0, high="25%"
)

# Compute forecasted values and ratios
data.compute({
    "income:revenue": f"""
        income:revenue:-1 * 
        (1 + {assumptions.get('%revenue_growth_rate')})
    """,
    "%revenueGrowthRate": "function:growth:income:revenue",
    "income:netIncome": f"income:revenue * {assumptions.get('%net_income_margin')}",
}, forecast=assumptions.get("projection_years"))

projected_revenue = data.get("income:revenue")
projected_net_income = data.get(f"income:netIncome:{assumptions.get('projection_years')}")

shares_outstanding = data.get("income:weightedAverageShsOut")
future_market_cap = assumptions.get("pe_ratio") * projected_net_income
discounted_future_market_cap = future_market_cap / (
            (1 + assumptions.get("%discount_rate")) ** assumptions.get("projection_years"))

stock_value = discounted_future_market_cap / shares_outstanding

# Set the final value
model.set_final_value({
    "value": stock_value,
    "units": "$"
})

# Render results
model.render_results([
    [stock_value, "Present Value", "$"],
    [projected_net_income, "Estimated net income", "$"],
    [future_market_cap, "Estimated market capitalization", "$"],
    [discounted_future_market_cap, "Market capitalization discounted to present", "$"],
    [shares_outstanding, "Shares Outstanding", "#"],
    [data.get("income:eps"), "Earnings Per Share (EPS)", "$"],
    [data.get("profile:price"), "Market Price", "$"],
    [data.get("ratio:priceEarningsRatio"), "Price to Earnings (PE) Ratio", "#"]
])

# Render chart
model.render_chart({
    "data": {
        "income:revenue": "Revenue",
        "income:netIncome": "Net Income"
    },
    "start": -assumptions.get("historical_years"),
    "end": "*",
    "properties": {
        "title": "Historical and forecasted data",
        "set_editable": [
            "income:revenue",
            "income:netIncome"
        ]
    }
})

# Render table for estimated future values
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
    },
    "start": -1,
    "end": "*",
    "properties": {
        "title": "Estimated Future Values",
        "order": "ascending",
        "number_format": "M"
    }
})

# Render historical values table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "income:costOfRevenue": "Cost of Revenue",
        "income:grossProfit": "Gross Profit",
        "%grossMargin": "Gross Margin",
        "income:operatingIncome": "Operating Income",
        "%operating_margin": "Operating Margin",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Values",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Render historical growth rates table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
        "%netIncomeGrowthRate": "Net Income Growth Rate",
        "balance:totalStockholdersEquity": "Stockholders Equity",
        "%totalStockholdersEquityGrowthRate": "Equity Growth Rate",
        "%roic": "Return on Invested Capital (ROIC)",
        "nopat": "After-tax Operating Income",
        "%taxRate": "Income Tax Rate",
        "investedCapital": "Invested Capital",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Growth Rates",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Set description for assumptions
assumptions.set_description({
    "%discount_rate": r"""
        ## Discount Rate

`Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium`

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

[Read More](https://www.investopedia.com/terms/c/costofequity.asp#mntl-sc-block_1-0-20)
    """,

"beta": r"""
        ## Beta

Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.
    """,

"%risk_free_rate": r"""
        ## Risk-Free Rate

The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.
        By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.
    """,

"%market_premium": r"""
        ## Market Premium

Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.
    """,

"pe_ratio": r"""
        ## Price to Earnings (PE) Ratio

Estimated Price to Earnings (PE) Ratio at the end of the projection period.

`Future Market Cap` = `PE Ratio` * `Projected Net Income`
    """,

"%revenue_growth_rate": r"""
        ## Revenue Growth Rate

The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.
    """,

"%net_income_margin": r"""
        ## Net Income Margin

Net Income expressed as a percentage of Revenue.
    """,

"historical_years": r"""
        ## Historical Years

The number of historical years used to calculate averages for historical data.
    """,

"projection_years": r"""
        ## Projection Years

The number of years for projecting the analysis into the future.
    """,
})

print("End of model.")

Estimated Value

USD

Market Price USD

* Values are not guaranteed, please do your own
research before making investment decisions.

Discounted Future Market Cap

Interactive Assumptions

Discount Rate Discount Rate `Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium` The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula. Read More	%
↳ Beta Beta Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.	#
↳ Risk Free Rate Risk-Free Rate The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.	%
↳ Market Premium Market Premium Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.	%
Pe Ratio Price to Earnings (PE) Ratio Estimated Price to Earnings (PE) Ratio at the end of the projection period. `Future Market Cap` = `PE Ratio` * `Projected Net Income`	#
Revenue Growth Rate Revenue Growth Rate The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.	%
Net Income Margin Net Income Margin Net Income expressed as a percentage of Revenue.	%
Historical Years Historical Years The number of historical years used to calculate averages for historical data.	#
Projection Years Projection Years The number of years for projecting the analysis into the future.	#

Results
Present Value	85.9 USD
Estimated net income	29.19 Bil. USD
Estimated market capitalization	421.2 Bil. USD
Market capitalization discounted to present	273.1 Bil. USD
Shares Outstanding	3.18 Bil.
Earnings Per Share (EPS)	6.15 USD
Market Price	95.58 USD
Price to Earnings (PE) Ratio	14.43

Historical and forecasted data

Monetary values in USD

{"sectionId": "section-chart-1", "sectionType": "chart", "title": "Historical and forecasted data", "timeseries": "annual", "series": [{"label": "Revenue", "mappingKey": "income:revenue", "data": [{"l": "2015", "x": "2015-12-31", "y": 87803000000}, {"l": "2016", "x": "2016-12-31", "y": 94176000000}, {"l": "2017", "x": "2017-12-31", "y": 97741000000}, {"l": "2018", "x": "2018-12-31", "y": 101060000000}, {"l": "2019", "x": "2019-12-31", "y": 105684000000}, {"l": "2020", "x": "2020-12-31", "y": 82227000000}, {"l": "2021", "x": "2021-12-31", "y": 83081000000}, {"l": "2022", "x": "2022-12-31", "y": 83442000000}, {"l": "2023", "x": "2023-12-31", "y": 115340000000}, {"l": "2024", "x": "2024-12-31", "y": 125397000000}, {"l": "2025", "x": "2025-12-31", "y": 130537023030, "oy": 130537023030, "e": true, "d": 2025, "g": 4.1, "og": 4.1}, {"l": "2026", "x": "2026-12-31", "y": 135887735603, "oy": 135887735603, "e": true, "d": 2026, "g": 4.1, "og": 4.1}, {"l": "2027", "x": "2027-12-31", "y": 141457773886, "oy": 141457773886, "e": true, "d": 2027, "g": 4.1, "og": 4.1}, {"l": "2028", "x": "2028-12-31", "y": 147256128038, "oy": 147256128038, "e": true, "d": 2028, "g": 4.1, "og": 4.1}, {"l": "2029", "x": "2029-12-31", "y": 153292156726, "oy": 153292156726, "e": true, "d": 2029, "g": 4.1, "og": 4.1}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}, {"label": "Net Income", "mappingKey": "income:netIncome", "data": [{"l": "2015", "x": "2015-12-31", "y": 22894000000}, {"l": "2016", "x": "2016-12-31", "y": 21938000000}, {"l": "2017", "x": "2017-12-31", "y": 22183000000}, {"l": "2018", "x": "2018-12-31", "y": 22393000000}, {"l": "2019", "x": "2019-12-31", "y": 19715000000}, {"l": "2020", "x": "2020-12-31", "y": 3377000000}, {"l": "2021", "x": "2021-12-31", "y": 22109000000}, {"l": "2022", "x": "2022-12-31", "y": 13677000000}, {"l": "2023", "x": "2023-12-31", "y": 19142000000}, {"l": "2024", "x": "2024-12-31", "y": 19722000000}, {"l": "2025", "x": "2025-12-31", "y": 24854249184, "oy": 24854249184, "e": true, "d": 2025, "g": 26.02, "og": 26.02}, {"l": "2026", "x": "2026-12-31", "y": 25873024859, "oy": 25873024859, "e": true, "d": 2026, "g": 4.1, "og": 4.1}, {"l": "2027", "x": "2027-12-31", "y": 26933560147, "oy": 26933560147, "e": true, "d": 2027, "g": 4.1, "og": 4.1}, {"l": "2028", "x": "2028-12-31", "y": 28037566778, "oy": 28037566778, "e": true, "d": 2028, "g": 4.1, "og": 4.1}, {"l": "2029", "x": "2029-12-31", "y": 29186826640, "oy": 29186826640, "e": true, "d": 2029, "g": 4.1, "og": 4.1}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}], "editableDates": {"2025-12-31": 41, "2026-12-31": 42, "2027-12-31": 43, "2028-12-31": 44, "2029-12-31": 45}, "properties": {"display_table": true}, "width": "full"}

Edit Chart Values	2025-12-31	2026-12-31	2027-12-31	2028-12-31	2029-12-31

↳ Growth Rate

Estimated Future Values

Monetary values in USD amounts except #	2024 Dec 31	LTM Jan 09	2025 Dec 31	2026 Dec 31	2027 Dec 31	2028 Dec 31	2029 Dec 31
Revenue	125,397	122,563	130,537	135,888	141,458	147,256	153,292
Revenue Growth Rate	8.72%	-2.26%	4.1%	4.1%	4.1%	4.1%	4.1%
Net Income	19,722	21,056	24,854	25,873	26,934	28,038	29,187

Monetary values in USD

amounts except #

2024
Dec 31

LTM
Jan 09

2025
Dec 31

2026
Dec 31

2027
Dec 31

2028
Dec 31

2029
Dec 31

Revenue

125,397

122,563

130,537

135,888

141,458

147,256

153,292

Revenue Growth Rate

8.72%

-2.26%

4.1%

Net Income

19,722

21,056

24,854

25,873

26,934

28,038

29,187

Historical Values

Monetary values in USD amounts except #	Average	LTM Jan 09	2024 Dec 31	2023 Dec 31	2022 Dec 31	2021 Dec 31	2020 Dec 31	2019 Dec 31	2018 Dec 31	2017 Dec 31	2016 Dec 31	2015 Dec 31
Revenue	99,865	122,563	125,397	115,340	83,442	83,081	82,227	105,684	101,060	97,741	94,176	87,803
Cost of Revenue	20,676	43,491	47,435	38,142	10,608	-240	22,092	21,539	16,396	11,880	9,679	6,418
Gross Profit	79,189	79,072	77,962	77,198	72,834	83,321	60,135	84,145	84,664	85,861	84,497	81,385
Gross Margin	80.73%	64.52%	62.17%	66.93%	87.29%	100.3%	73.13%	79.62%	83.78%	87.85%	89.72%	92.69%
Operating Income	24,036	24,056	23,364	21,636	15,629	29,563	2,505	25,967	28,538	27,377	32,120	33,641
Operating Margin	24.33%	19.63%	18.63%	18.76%	18.73%	35.58%	3.05%	24.57%	28.24%	28.01%	34.11%	38.31%
Net Income	18,928	21,056	19,722	19,142	13,677	22,109	3,377	19,715	22,393	22,183	21,938	22,894
Net Margin	19.04%	17.18%	15.73%	16.6%	16.39%	26.61%	4.11%	18.65%	22.16%	22.7%	23.29%	26.07%

Historical Growth Rates

Monetary values in USD amounts except #	Average	LTM Jan 09	2024 Dec 31	2023 Dec 31	2022 Dec 31	2021 Dec 31	2020 Dec 31	2019 Dec 31	2018 Dec 31	2017 Dec 31	2016 Dec 31	2015 Dec 31
Revenue	99,865	122,563	125,397	115,340	83,442	83,081	82,227	105,684	101,060	97,741	94,176	87,803
Revenue Growth Rate	4.1%	-2.26%	8.72%	38.23%	0.435%	1.04%	-22.2%	4.58%	3.4%	3.79%	7.26%	2.11%
Net Income	18,928	21,056	19,722	19,142	13,677	22,109	3,377	19,715	22,393	22,183	21,938	22,894
Net Margin	19.04%	17.18%	15.73%	16.6%	16.39%	26.61%	4.11%	18.65%	22.16%	22.7%	23.29%	26.07%
Net Income Growth Rate	42.61%	6.76%	3.03%	39.96%	-38.14%	554.7%	-82.87%	-11.96%	0.947%	1.12%	-4.18%	-0.707%
Stockholders Equity	189,214	181,154	179,120	185,735	180,227	187,606	184,680	187,146	196,166	206,936	199,581	192,998
Equity Growth Rate	-0.098%	1.14%	-3.56%	3.06%	-3.93%	1.58%	-1.32%	-4.6%	-5.21%	3.69%	3.41%	4.67%
Return on Invested Capital (ROIC)	8.24%	10.71%	8.12%	7.69%	6.15%	18.89%	2.43%	7.12%	8.75%	9.94%	4.91%	6%
After-tax Operating Income	19,263	21,198	19,965	19,029	13,378	23,799	3,662	20,206	22,876	22,460	22,045	23,276
Income Tax Rate	13.49%	11.88%	14.55%	12.05%	14.4%	19.5%	-46.19%	22.19%	19.84%	17.96%	31.37%	30.81%
Invested Capital	254,041	197,985	245,874	247,517	217,677	125,993	150,559	284,004	261,322	225,948	449,337	388,236