Should You Buy, Hold or Sell Wells Fargo Stock Ahead of Q4 Earnings?

Core Viewpoint - Wells Fargo & Company (WFC) is expected to report its fourth-quarter and full-year 2025 earnings results on January 14, 2026, before market open [1]. Financial Performance - WFC's performance in the first nine months of 2025 benefited from higher non-interest income and lower provisions, although increased expenses and a decline in net interest income (NII) negatively impacted results [2]. - The Zacks Consensus Estimate for fourth-quarter revenues is $21.60 billion, indicating a 6% year-over-year growth [2]. - The consensus estimate for earnings for the upcoming quarter has been revised upward to $1.66, reflecting a 16.9% improvement from the prior-year quarter [3]. Earnings Estimates - The Zacks Consensus Estimate for NII is projected at $12.4 billion, representing a 4.1% increase from the previous quarter [8]. - WFC's total non-interest income is estimated at $9.2 billion, suggesting a 3.4% decline from the prior quarter [14]. Loan and Interest Income - The Federal Reserve's interest rate cuts in the fourth quarter are expected to positively influence WFC's NII, with the Fed funds rate now in the 3.50-3.75% range [7]. - The demand for commercial, industrial, real estate, and consumer loans remained strong, likely improving WFC's lending activity [8]. Non-Interest Revenues - Mortgage banking revenues are estimated at $258.5 million, indicating a 3.5% decline from the previous quarter due to lower refinancing activity [11]. - Investment advisory and other asset-based fee revenues are expected to rise to $2.8 billion, reflecting a sequential increase of 4.4% [11]. Expense Management - WFC's non-interest expenses for the fourth quarter are expected to be $13.5 billion, down from $13.9 billion in the third quarter, due to effective expense management initiatives [15]. - The company is focused on cost-cutting measures, including streamlining its organizational structure and reducing headcount [29]. Asset Quality - Total non-accrual loans are projected to reach $8 billion, indicating a 4.5% sequential increase, while non-performing assets are expected to rise to $8.1 billion, a 3.5% increase from the previous quarter [16]. Strategic Outlook - WFC's management has raised its medium-term return on tangible common equity (ROTCE) target to 17-18% from the previous 15%, indicating stronger profitability prospects [30]. - The removal of the asset cap has allowed for balance-sheet growth, supported by disciplined expense management and expanding fee-based initiatives [27].