Wells Fargo to Report Q2 Earnings: Buy Now or Wait for the Results?

Core Insights - Wells Fargo & Company (WFC) is set to report its second-quarter 2025 results on July 15, 2025, before market open, with a consensus revenue estimate of $20.7 billion, indicating a slight year-over-year rise [1][2][6] Financial Performance - The first-quarter performance of WFC showed a slight improvement in non-interest income, while net interest income (NII) experienced a decline [2] - The consensus estimate for earnings for the upcoming quarter has been revised downward to $1.40, reflecting a 5.3% increase from the prior-year quarter [3][4] Key Developments - In June 2025, the Federal Reserve lifted the $1.95 trillion asset cap on WFC, which had been imposed due to a fake account scandal, allowing for potential growth [5][6][26] Revenue Estimates - The Zacks Consensus Estimate for NII is projected at $11.94 billion, indicating a slight rise from the previous year's quarter [8] - Mortgage banking revenues are estimated at $271.2 million, suggesting an 11.6% rise year-over-year [10] - Investment advisory and other asset-based fee revenues are expected to reach $2.5 billion, reflecting a 1.6% year-over-year increase [11] - Investment banking income is estimated at $721.3 million, indicating a 12.5% rise year-over-year [13] Expense Management - WFC's expenses are anticipated to have declined modestly due to prudent expense management initiatives, including organizational restructuring and branch closures [14][27] Asset Quality - The consensus estimate for total non-accrual loans is pegged at $8.1 billion, suggesting a year-over-year decline of 4.1% [16] Market Performance - In Q2 2025, WFC shares rose 13%, compared to a 20.2% increase in the industry [19] - WFC is currently trading at a forward P/E of 12.99X, below the industry's average of 14.58X, indicating a relatively inexpensive valuation [21] Strategic Outlook - The removal of the asset cap allows WFC to enhance its deposit base, grow its loan portfolio, and increase securities holdings, potentially boosting NII and overall profitability [26] - Ongoing cost-cutting measures are expected to enhance long-term profitability [27]