Wells Fargo has one job to do to sustain its struggling stock’s recent bounce. It’s not complicated. The stakes are high going into earnings on Tuesday morning, following two consecutive lackluster quarters . Wells Fargo’s path back into our good graces is simple: It needs a clean beat across key metrics. “It has had two mixed quarters back to back. That should create an easier setup into earnings. The expectations are low, but just because expectations are low doesn’t mean we should give it a pass,” Club portfolio director Jeff Marks said during Monday’s Morning Meeting . “We do need to see a solid beat here, or else its longstanding position in the portfolio could be in jeopardy.” That means topping expectations for revenue, earnings, non-interest income, and net interest income – some of which failed to impress investors in the bank’s 2026 first quarter, sending shares down nearly 6% in a single session in mid-April. At the time, we downgraded Wells Fargo to our hold-equivalent 2 rating from buy, and even contemplated whether to exit the position entirely. “Wells hasn’t done what I’ve wanted,” Jim Cramer said last month . “It’s disappointing. I want to sell companies that are underperforming to be able to buy outperformers.” Reflecting that view, we booked profits in our Wells position on June 2 to make sure we protected the 150% average gain on stock purchased in January 2021. Jim has been frustrated with Wells Fargo ever since its post-asset-cap-removal climb ran into a tough 2025 fourth-quarter earnings report in mid-January. The stock had attempted to mount a rally several times after that, but things turned ugly again after those tepid Q1 results. Shortly thereafter, we put Wells Fargo in the penalty box. The stock hit a 52-week low of nearly $73 on May 15. WFC YTD mountain Wells Fargo YTD While shares have gained 19% to over $86 since then, they are still down nearly 6% year to date. For comparison, the S & P 500 is up almost 10.5% for the year, while the financials sector index is up more than 2%. Wells Fargo’s underperformance comes into sharp focus when compared to fellow Club name Goldman Sachs , which is up nearly 20% in 2026, riding a dominant year in investment banking, including a lead underwriter position in SpaceX ‘s record initial public offering (IPO) last month. Goldman also reports on Tuesday morning. (We are not worried about that one.) What Wells Fargo must do is prove that the seven-year wait for the Federal Reserve to lift its $1.95 trillion asset cap for past misdeeds, which finally happened in June 2025, was worth it. A better-than-expected second-quarter earnings report would be a great start for investors to start believing that the stock’s eight-week bounce is the start of its rise back to its record high close above $96 on Jan. 6. Revenue of $21.8 billion expected in Q2 Revenue was a big disappointment last quarter, making it even more important this earnings season. Total revenue for the three months ended March 31 increased 6.4% year over year to $21.45 billion in the first quarter, but fell short of the LSEG compiled consensus estimate of $21.8 billion. For the upcoming results, the consensus Q2 estimate calls for revenue growth of 1.6% to $21.8 billion. EPS of $1.72 expected Earnings per share (EPS) will also be a focus after the bank just barely beat the Street expectations in April. EPS came in at $1.60 for the first quarter, versus the $1.58 consensus estimate. For the upcoming release, Wells is estimated to deliver earnings of $1.72 per share, according to LSEG, a healthy 7.5% year-over-year gain. NII of $12.38 billion expected While net interest income (NII) was strong back in April, it will continue to be a top priority for investors. That’s because NII, the difference between interest earned (loans) and interest paid (deposits), is a key way Wells makes money. Its bread-and-butter consumer banking division, which relies heavily on interest income, accounted for roughly 46% of overall revenue last quarter. For the upcoming quarter, Wall Street analysts expect NII to come in at $12.38 billion, according to FactSet data. That would be an increase of 5.7%. Tuesday’s earnings report will also show whether Wells Fargo is on track to hit its $50 billion NII goal for 2026. This figure could change to the upside (all else equal), given NII is heavily contingent upon the Fed’s next interest rate move, which has shifted from questions in January about how many cuts to expect in 2026 to whether there might be rate increases. However, when rates increase, all else usually isn’t equal; for that reason, we need to be mindful of the non-interest-bearing deposits Wells has on its book of business. Minutes from the Fed’s two-day June meeting , the first for the new Chairman Kevin Warsh , showed monetary policymakers offering competing cases for hikes and cuts. While Warsh and company held rates steady in the face of inflation perking up due to Iran War-elevated oil prices, President Donald Trump has made no secret that he wants lower rates. Investment banking and capital markets Then there’s noninterest income, which reflects the money banks generate through fees and commissions. Although Wells has long relied on interest-based businesses like consumer banking, management has been growing its fee-based segments over the past several years to diversify its revenue streams. For example, Wells has invested heavily in investment banking, bringing on a wave of senior hires to expand its budding dealmaking business. While non-interest income isn’t the exact barometer to tell whether those specific investments are paying off, it helps gauge how much the bank has actually diversified its top line On investment banking, Wells CEO Charlie Scharf said last quarter that, “While market conditions can change, the outlook for investment banking remains strong, and we entered the second quarter with a strong pipeline driven by M & A and equity capital markets.” He added, “We continue to grow our markets business amid a mixed and volatile trading environment, with revenue up 19% from a year ago. Client sentiment is cautious, but engaged as macro and geopolitical uncertainty has increased and clients have largely shifted to a more selective and defensive posture.” Bank of America’s Ebrahim Poonawala predicted that Wells will beat earnings expectations, citing “momentum in the capital markets business,” which includes investment banking. “They have hired a lot of bankers over the last two or three years. They deployed the balance sheet, so I think the most obvious area of beat for them on the revenue side should most likely come from the capital markets side,” the analyst said. Poonawala added that “a resilient economy” will also help Wells, because credit quality hasn’t been an issue and loan growth should “generally be strong” due to a buoyant labor market. ROTCE of 15.3% expected Beyond just beating expectations on those headline metrics, management needs to reassure investors that the bank is still on track for solid top-line growth. Specifically, they want to see return on tangible common equity (ROTCE) – a key measure of how efficiently a bank uses its capital to generate profits – is still heading toward a sustainable 17% to 18% range. Estimates for Q2 are for ROTCE of 15.3%, according to FactSet, flat year over year. Efficiency ratio of 63.3% expected Wells Fargo’s efficiency ratio will be under a microscope as well. This metric, which is operating expenses divided by net revenue, has trended in the wrong direction for the last two quarters. For Q2, a 63.3% efficiency ratio is expected, down from 64% in the year-ago period. On this line item, lower is better. So, that would also mark an improvement from the 67% in the first quarter. Bottom line We’re hopeful but skeptical coming into the quarter. This earnings season could be a make-or-break moment for Wells Fargo. There is no denying that Scharf is an all-star leader, running a great bank. A stellar report should ease investor anxiety and continue to lift the stock, making that mid-May 52-week low a distant memory. A miss, however, will give us another reason to doubt whether it’s worth waiting around for Wells to realize the benefits of the asset-cap removal or whether it was the silver bullet we had been expecting all along. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) 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Wells Fargo bounces off 52-week lows. What it must do to get out of the penalty box
