Stocks opened in the red this morning, with the Dow Jones Industrial Average (DJINDICES:^DJI) down 0.19% and the broader S&P 500 (SNPINDEX:^GSPC) down 0.20% as of 10:10 a.m. EST.

Wells Fargo beats expectations
The largest mortgage-lender in the U.S., Wells Fargo (NYSE:WFC), reported fourth-quarter results this morning. Earnings per share came in at $0.89, which beat analyst expectations by $0.02. Revenue also came in ahead of expectations at $21.95 billion versus $21.29 billion. Nevertheless, the market is unimpressed, and the stock is underperforming the broad market this morning.

In fact, Wells Fargo's stock has lagged those of its universal-banking competitors -- Bank of America (NYSE:BAC), JPMorgan Chase and Citigroup -- during the rally in bank shares of the past three months (see graph below). However, this partially reflects the other banks' rebound from a horrific performance in 2011. Note that US Bancorp (NYSE:USB) -- a pure-play commercial bank and arguably Wells' best comparison -- has also lagged the universal banks.

WFC Chart

WFC data by YCharts.

Despite this, there is a stark distinction between the two groups: Wells and US Bancorp trade at a premium to their book values, while the rest trade at a discount (JPMorgan is the closest to closing that discount with a price-to-book-value ratio of 0.92).

Wells Fargo is well-positioned to profit from the refinancing boom now underway, and last quarter's results bear that out. On a longer-term basis, it stands to benefit from the recovery in the housing market. More focused and better-managed, Wells Fargo trades at a premium to its largest competitors and, importantly, is less subject to swings in its valuation. For investors seeking to capture above-average returns through buying misvalued stocks, there are better candidates than Wells. However, for long-term investors with more modest goals, it should produce acceptable returns from current prices over the full course of a credit cycle (or more than one, ideally!).

Alex Dumortier, CFA has no position in any stocks mentioned; you can follow him @longrunreturns. The Motley Fool recommends Wells Fargo & Company. The Motley Fool owns shares of Bank of America and Wells Fargo & Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.