Morningstar

Wells Fargo Earnings: A Money-Center Bank at a Crossroads

We’ve modestly raised our fair value estimate of Wells Fargo stock.

Facade of Wells Fargo bank branch with visible ATM and signage.
Smith Collection/Gado via Getty
Securities in This Article
Wells Fargo & Co
(WFC)

Key Morningstar Metrics for Wells Fargo

  • Fair Value Estimate
    : $90.00
  • Morningstar Rating
    : ★★★
  • Morningstar Economic Moat Rating
    : Wide
  • Morningstar Uncertainty Rating
    : Medium

What We Thought of Wells Fargo’s Earnings

Wells Fargo WFC reported mixed second-quarter 2026 earnings results on July 14, sending shares down a low-single-digit percentage as the net interest margin trajectory highlights the firm’s aspirational changes.

Why it matters: Wells Fargo has long swum in its own lane with a scale and business mix that blended the attractive elements of a money-center bank with a regional bank, but now, one year removed from the lifting of the asset cap, the firm is taking steps to look closer to a traditional money-center bank.

  • Unshackled by regulators to increase the balance sheet, management has deployed significant capital to expand its trading desk, hoping it will spur ancillary fee income growth that offsets the NIM compression associated with the lower-spread securities financing business in the interim.
  • With net interest margins down 17 basis points over the past two quarters, we believe the decision to sacrifice the relative strength of its cost-advantaged deposit franchise to grow its trading business is unlikely to improve its competitive positioning within the banking universe.

The bottom line: After digesting the second-quarter results for wide-moat Wells Fargo, we are modestly raising our fair value estimate to $90 per share from $88, viewing shares as slightly undervalued.

  • The fair value increase was chiefly due to a 50-basis-point reduction in the midcycle efficiency ratio to 58.2%, as the dissipation of legacy compliance costs associated with the lifting of regulatory penalties provides enhanced visibility into the firm’s capability to drive positive operating leverage.
  • While our views surrounding near-term net interest income have become less rosy due to the prioritization of the trading franchise, our updated interest rate forecast incorporates a delay in rate cuts until 2027, effectively offsetting the impacts of a lower-yielding interest-earning asset mix.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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