Wells Fargo has the Financial Strength Rank of 3. It displays poor financial strength and is likely in financial distress. Usually this is caused by too much debt for the company.
Warning Sign:
Wells Fargo & Co displays poor financial strength. Usually, this is caused by too much debt for the company.
GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors:
1. The debt burden that the company has as measured by its
Interest Coverage (current year). The higher, the better.
2. Debt to revenue ratio. The lower, the better.
3.
Altman Z-Score.
GuruFocus does not calculate Wells Fargo's interest coverage with the available data.
Wells Fargo's debt to revenue ratio for the quarter that ended in Jun. 2022 was 2.40.
Altman Z-Score does not apply to banks and insurance companies.
Wells Fargo Financial Strength Calculation
GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors
A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.
1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.
Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:
Wells Fargo's Interest Expense for the
months ended in Jun. 2022 was $-1,358 Mil. Its Operating Income for the
months ended in Jun. 2022 was $0 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Jun. 2022 was $150,291 Mil.
Wells Fargo's Interest Coverage for the quarter that ended in Jun. 2022 is
The higher the ratio, the stronger the company's financial strength is.
2. Debt to revenue ratio. The lower, the better.
Wells Fargo's Debt to Revenue Ratio for the quarter that ended in Jun. 2022 is
3. Altman Z-Score.
Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.
The zones of discrimination were as such:
When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.
Altman Z-Score does not apply to banks and insurance companies.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
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