Wells Fargo (NYSE:WFC) didn't have a great year in 2017. The fake-accounts scandal affected 1.5 million more people than was originally expected, and the bank faced several other "mini-scandals" in 2017. After 2017's poor performance, is Wells Fargo stock a buy?

A full transcript follows the video.

This video was recorded on Dec. 18, 2017.

Michael Douglass: Story No. 4: Wells Fargo. This is not a particularly happy story, because Wells Fargo has had a pretty darn rough 2017.

Matt Frankel: This is technically a 2016 story, because that's when the news of their wrongdoing -- in Elizabeth Warren's phrase, a scam -- first came to light. Whether you think the bank was completely at fault or it was a bunch of rogue employees, that's another discussion for another day. But one of my favorite Warren Buffett lines is, "you'll find that when you turn the lights on, there's not just one cockroach in the kitchen." And this really applies here. First of all, the number of people affected by the fake-account scandal during 2017 grew from the 2 million that were originally disclosed to about 3.5 million. Not only that, there were a bunch of other mini-scandals that were brought to light. In one, Wells Fargo was charging 800,000 customers for auto insurance they didn't need. In one they were caught improperly raising mortgage rates for certain customers that they hadn't properly disclosed that they were going up for a rate increase. And there were a couple more. They were making unauthorized changes to people's mortgages. So you see all of these scandals snowballing, and it's pretty much because regulators, the investing media decided to take a closer look at Wells Fargo and scrutinize them a little more. So even though this was brought to light in 2016, it turned into a bad 2017. 2016 was OK for Wells Fargo in that they did initial damage control, in my opinion, pretty well. But in 2017, it's just been one thing after another, and it's really been weighing on the company's results and, as a result, its stock price.

Douglass: Right. I think when we take a step back, one of the things that Wells Fargo was really well known for was its aggressive sales culture. [Former] CEO John Stumpf used to say that "eight is great." What that meant was, let's try and get each Wells customer into at least eight products. With that being the expectation, employees were under a great deal of pressure and pretty clearly cheated. Not saying, to be clear, that all Wells Fargo employees cheated. That's certainly not the case. But a significant proportion did, and we're seeing issues across a number of different departments. So that's been a really rough drip-drip-drip of bad news for Wells Fargo. And as you noted, across the board the bank is reeling. Their efficiency ratio, which is a measure of core profitability and their ability to control expenses, has climbed. That's bad. You want a smaller efficiency ratio. It's above 65% in the most recent quarter. Historically speaking, Wells Fargo has generally been in the mid-to-upper 50s, and that's kind of where you want to see a big bank. And revenue and earnings per share are both down year over year, because frankly, there's a trust deficit, and I think understandably so.

It's interesting. I don't know what I think about Wells Fargo going forward in a lot of ways. What I do know is, the sales culture was supposedly the one thing that really made Wells really different from the other big banks. And sure, there were other things too, to be clear. But that was one of the really big pieces of any investing thesis. Now that that is, at least for the moment, gone -- and again, to be clear, rightfully so. Is the stock undervalued? Possibly. But by the same token, for me, when I'm looking for investments, I'm looking for companies that can distinguish themselves in some way. And I don't see a lot in Wells that really breaks it out differently, at least for me as an investor. And frankly, I want to beat the market. I'm not looking to match the market's return, or buy, essentially, a high-cost ETF of big bank stocks. I'm looking for the best investments. And Wells just doesn't fit that criteria for me.

Frankel: Yeah. As Buffett would say, they lost one of their most durable competitive advantages in terms of the cross-selling ability. They never really stopped to think whether or not people needed eight different baking products. I read somewhere that the average person has less than 10 banking products total between all the banks and credit card companies and everybody they deal with. That was a pretty lofty goal, so it's not surprising that it led to wrongdoing.

Matthew Frankel has no position in any of the stocks mentioned. Michael Douglass has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.