Buffett Brain · Research note
Score updated 22 Oct 2026 · analysis from 2 Jun 2026
WFC· Financial Services
Wells Fargo
Wells Fargo is a giant deposit franchise that still cannot turn its profits into cash, with owner earnings yield sitting at negative 8.1 percent.
Buffett fit
Weak fit
Owner
42
Durability
65
Management
32
Price
49
Score updated 22 Oct 2026 · analysis from 2 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Financial Services stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned all of Wells Fargo, the number that would keep me up is yield at negative 8.1 percent, with running at negative 0.89 times reported net income.
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The franchise itself is durable. People do not switch checking accounts on a whim, and that stickiness shows up in a durability score of 65 and revenue at 10.4 percent.
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Management has been buying back stock, with the share count shrinking about 5.9 percent a year, and on the surface that is shareholder friendly.
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There is no here at any price I would call honest. Yes, the stock trades at about 11.2 times earnings, which looks cheap, but a low multiple on earnings that do not convert to cash is a trap, not a bargain.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
6- 1Sticky deposit franchise gives genuine switching costs, reflected in a durability score of 65.
- 2Revenue has compounded at 10.4 percent a year, healthy for a bank of this size.
- 3 of 20.5 percent shows the lending spread is currently wide.
- 4Management has reduced the share count by about 5.9 percent a year through .
Concerns
7- 1Valuation is a trap: yield is negative 8.1 percent, so the cheap-looking 11.2 is paying for cash the business does not generate.
- 2 runs at negative 0.89 times net income, meaning reported profit is not turning into spendable cash.
- 3Financial health scores a zero, with interest coverage of just 0.63 and of 2.53.
- 4Net debt to EBITDA of 8.73 is extreme, even allowing for the way banks carry .
Price history
$82.42+62.7%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Wells Fargo earns money the way every big bank does, by paying little on deposits, lending that money out at higher rates, and collecting fees on cards, mortgages, and wealth management. runs about 20.5 percent and revenue has grown a touch over 10 percent a year, but a bank's reported margin tells you less than its balance sheet does. The real question is not whether the spread is wide today, it is whether the loans will still be good when the cycle turns.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 22, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Financial Services
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