Wells Fargo & Company WFC

Wells Fargo shares fell about 14% from their early-2026 peak even though the cap was gone, because the price had already paid for the liberation. The stock ran to roughly 2.2 times tangible book; as the first post-cap quarters came in growth-rich but return-poor — loans up 11% yet return on tangible equity stuck at 14.5% — the market re-rated it back toward 1.8 times tangible book. The pullback was about execution, not the freedom itself.

Wells Fargo earned a 14.5% return on tangible common equity (ROTCE) in Q1 2026, against a stated medium-term target of 17% to 18%. ROTCE matters because bank valuations track it closely: at 14.5% the stock trades near 1.8 times tangible book, while JPMorgan, earning above 20%, commands roughly 3 times. Closing that three-to-four-point gap is the main argument for a higher multiple — and management has not committed to a year for reaching it.

Wells Fargo holds a $40 billion repurchase authorization and bought back about $4 billion of stock in Q1 2026 alone, retiring roughly 46 million shares. Combined with the $0.45 quarterly dividend, the bank returned $5.4 billion to shareholders in the quarter and shrank its diluted share count about 6% over the year. That buyback is why diluted EPS rose 15% to $1.60 even as net income stayed near $5 billion — the per-share growth came largely from fewer shares.

Wells Fargo trades at about 12.8 times trailing earnings and 1.8 times tangible book, a clear discount to JPMorgan's roughly 3 times tangible book and a slight premium to Citigroup near book value. The discount, though, mirrors the returns: JPMorgan earns above 20% on tangible equity versus Wells's 14.5%. A conservative model values Wells near $67 to $71, below the $83.74 price, so the stock is not statistically cheap — it is priced for some of the re-rating to arrive.

The Federal Reserve lifted Wells Fargo's $1.95 trillion asset cap on June 3, 2025, then terminated the entire 2018 enforcement action on March 5, 2026 — the last of fourteen consent orders cleared since 2019. That left the bank free of consent orders for the first time in fifteen years. The asset cap had been imposed in February 2018 after the fake-accounts scandal and froze the balance sheet while rivals grew.

At $83.74, Wells Fargo's price discounts a partial re-rating rather than the regulatory freedom, which is already settled. The stock sits above the $67–71 a conservative model can defend and below the ~$96 analyst consensus, paying for some — not all — of the move from 14.5% toward a 17–18% return on tangible equity. The open question is whether the room created by the lifted cap fills with profit or merely with assets.