Wells Fargo & Company (WFC) Simple Excess Return Model - Discounting Cash Flows
WFC
Wells Fargo & Company
WFC (NYSE)

Estimated Value

USD

Market Price USD

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

Simple Excess Return Model

Used to estimate the value of companies that have reached maturity and earn stable excess returns with little to no high growth chance. Excess Return models are better suited to calculate the intrinsic value of a financial company than an enterprise valuation model (such as the Discounted Free Cash Flow Model).

See our GitHub Documentation

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.

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↳ 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.

Return On Equity

Return on Equity

Return On Equity (ROE) is used to estimate the Earnings Per Share (EPS) expressed as a percentage of Book Value.

Growth In Perpetuity

Growth in Perpetuity

The rate at which the company's free cash flow is assumed to grow in perpetuity. By default, this is equal to the yield of the U.S. 10 Year Treasury Bond.

Historical Years

Historical Years

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

Results

Estimated Value 60.08 USD
Book value of equity invested 55.2 USD
Next year's estimated book value 50.93 USD
Present value of future excess returns 4.88 USD
Excess Return per share 0.244 USD
Cost of Equity (the discount rate) 9.43%
Average historical Return on Equity 9.93%
Average historical Payout Ratio 55.89%
Payout Ratio used 55.39%
Risk Free Rate of the 10 Year U.S. Treasury Note 4.43%

Historical and Forecasted Data

Monetary values are in USD

amounts of USD except for #

2024 LTM 2025 2026 2027 2028 2029
Beginning Book Value 50.36 48.77 48.77 50.93 53.19 55.54 58.01
Ending Book Value 48.77 55.2 50.93 53.19 55.54 58.01 60.58
EPS 5.43 5.64 4.84 5.06 5.28 5.52 5.76
Return on Equity 10.62% 11.16% 9.93% 9.93% 9.93% 9.93% 9.93%
Dividend per Share 1.5 1.6 2.68 2.8 2.93 3.06 3.19
Retained Earnings 3.93 4.04 2.16 2.26 2.36 2.46 2.57
Equity Cost per Share 4.75 4.6 4.6 4.8 5.02 5.24 5.47
Cost of Equity 9.43% 9.43% 9.43% 9.43% 9.43% 9.43% 9.43%
Excess Return 0.681 1.04 0.244 0.255 0.266 0.278 0.29

amounts of USD except for #

Average LTM 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Net Income 18,832 19,997 19,722 19,142 13,677 22,109 3,377 19,715 22,393 22,183 21,938 22,894
Total Equity 189,208 181,090 179,120 185,735 180,227 187,606 184,680 187,146 196,166 206,936 199,581 192,998
Return on Equity 9.93% 11.16% 10.62% 10.62% 7.29% 11.97% 1.8% 10.05% 10.82% 11.11% 11.37% 12.42%
Dividends Paid to Common Shareholders 6,039 5,249 5,509 4,795 4,186 2,437 5,024 8,435 7,872 7,645 7,680 7,602
Payout Ratio 55.89% 28.37% 27.62% 26.64% 34.7% 12.02% 290.5% 46.6% 38.05% 37.2% 37.72% 35.41%
Shares Outstanding 4,270 3,280 3,673 3,688 3,805 4,062 4,118 4,393 4,800 4,965 5,053 5,136
EPS 4.12 5.64 5.43 4.88 3.17 4.99 0.42 4.12 4.31 4.14 4.03 4.18
Dividend per Share 1.4 1.6 1.5 1.3 1.1 0.6 1.22 1.92 1.64 1.54 1.52 1.48
Book Value 45.0 55.2 48.77 50.36 47.36 46.19 44.85 42.6 40.87 41.68 39.5 37.57
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Discounting Cash Flows

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