Wells Fargo & Co. (NYSE: WFC) is currently the king of banks by market cap, and it also is the bank trading at the largest premium to its book value. So what are investors supposed to think of a Wells Fargo expanded buyback?
The reality is that Wells Fargo has promised frequently to do more share buybacks and to keep returning capital to its shareholders. Its aim in buybacks is to increase its earnings per share after the float shrinks and to return capital (lots and lots of it) to shareholders.
On top of announcing a common stock dividend of $0.375 per share after Tuesday’s close, Wells Fargo’s board of directors also increased its authority to repurchase common stock by an additional 350 million shares. With shares trading at roughly $49.00, that translates to some $17.15 billion that can be used for buybacks.
24/7 Wall St. wanted to see what this really translates to. The $17.15 billion is versus a market cap of roughly $249 billion. As far as a percentage of the 5.1 billion shares that Wells Fargo has outstanding, this represents 6.86%.
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