How To Trade Wells Fargo Stock Ahead Of Q3 Earnings?
Wells Fargo (NYSE:WFC) is set to report its earnings on Tuesday, October 14, 2025, marking the first full quarterly report since the Federal Reserve lifted the bank’s long-standing $1.95 trillion asset cap in late May 2025. While the lifting of the asset cap is a significant long-term positive, its impact on Q3 results is unlikely to be very notable, as it will take time for Wells Fargo to scale up lending, deposit-taking, and other asset-generating activities. Earnings for the quarter are projected to come in at $1.53 per share, per consensus estimates, up from $1.42 per share in the year-ago quarter, while revenues are estimated to come in at about $21.1 billion, up about 3% compared to last year. The bank is likely to witness improvement in investment banking (IB) and deal making revenue for Q3 2025, driven by easing inflation, which has boosted confidence and deal flows in the U.S. market.
The company has $261 billion in current market capitalization. Revenue over the last twelve months was $81 billion and net income stood at $21 billion. While a lot will depend on how results stack up against consensus and expectations, understanding historical patterns might just turn the odds in your favor if you are an event-driven trader.
There are two ways to do that: understand the historical odds and position yourself prior to the earnings release, or look at the correlation between immediate and medium-term returns post earnings and position yourself accordingly after the earnings are released. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.
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Wells Fargo’s Historical Odds Of Positive Post-Earnings Return
Some observations on one-day (1D) post-earnings returns:
- There are 20 earnings data points recorded over the last five years, with 9 positive and 11 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 45% of the time.
- However, this percentage decreases to 42% if we consider data for the last 3 years instead of 5.
- Median of the 9 positive returns = 4.0%, and median of the 11 negative returns = -3.3%
Additional data for observed 5-Day (5D) and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.
1D, 5D, and 21D Post Earnings Return
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if the 1D post-earnings return is positive. Here is some correlation data based on a 5-year and a 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.
Correlation With Peer Earnings
Learn more about Trefis RV strategy that has outperformed its all-cap stocks benchmark (combination of all 3, the S&P 500, S&P mid-cap, and Russell 2000), to produce strong returns for investors. Separately, if you want upside with a smoother ride than an individual stock like Wells Fargo, consider the High Quality portfolio, which has outperformed the S&P and clocked >91% returns since inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
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