Wells Fargo Shares Jump Nearly 10% in a Month: Should You Buy Now?

Core Viewpoint - Wells Fargo's stock has shown strong performance, rising 9.7% in the past month, outperforming the industry and close peers [1][4]. Group 1: Asset Cap Removal and Growth Opportunities - The Federal Reserve lifted Wells Fargo's $1.95 trillion asset cap in June 2025, allowing the bank to expand its balance sheet and growth potential [5][8]. - The removal of the asset cap enables Wells Fargo to increase deposits, grow its loan portfolio, and broaden securities holdings, leading to a rise in net interest income (NII) [6][8]. - The bank is focusing on expanding fee-generating activities, with trading-related assets increasing by approximately 50% since the end of 2023 and investment banking fees rising by 19% in the first nine months of 2025 [7][8]. Group 2: Financial Performance and Projections - Management expects Wells Fargo's fourth-quarter 2025 NII to be between $12.4 billion and $12.5 billion, up from $11.8 billion a year ago [11]. - For 2025 and 2026, the company's earnings are projected to rise by 16.8% and 10.8%, respectively, with upward revisions in estimates for both years [23][24]. Group 3: Cost Efficiency Initiatives - Wells Fargo is implementing cost-cutting measures, including streamlining its organizational structure and reducing its branch network, which declined by 2.1% year over year to 4,108 branches [13][14]. - The company aims to achieve $15 billion in gross expense savings by the end of the year through ongoing investments in digital infrastructure and process automation [15]. Group 4: Capital Management and Shareholder Returns - As of September 30, 2025, Wells Fargo's liquidity coverage ratio was 121%, with liquid assets totaling $486.1 billion, supporting robust capital distribution [19][21]. - The bank raised its common stock dividend by 12.5% to 45 cents per share and has a $40 billion share repurchase program in place, enhancing investor confidence [19][21]. Group 5: Valuation and Investment Appeal - Wells Fargo is trading at a forward P/E multiple of 12.58X, below the industry average of 14.86X, indicating it may be undervalued relative to peers [27][29]. - The stock is considered an attractive entry point for investors seeking steady growth and income potential, currently carrying a Zacks Rank of 2 (Buy) [29].