Jim Cramer reveals his favourite after day 1 of bank earnings

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Wells Fargo & Co (NYSE: WFC) reported lower-than-expected profit for its fiscal third quarter on Friday. Shares still closed the regular session up about 2.0%.

Cramer picks Wells Fargo over rivals

Nonetheless, its results were strong enough to make a famed investor – Jim Cramer reiterate that this stock was worth owning. This morning on CNBC’s “Squawk Box”, he said:

They’re back to old Wells Fargo, except this time it’s real, not phony. Charles Scharf knows how to run a bank. He’ll get the headcount right, expenses right; net interest margin is terrific. That stock is a buy. People can sell all they want, they’re wrong.

He expects the multinational to continue reporting great quarters moving forward. Other bright spots in the earnings report include a 36% annualised increase in net interest income and delinquencies at a historic low.

It’s Wells Fargo. This is the one my Charitable Trust owns. We were waiting for this quarter, and we got it. It’s the breakout Charlie quarter. Net interest income is extraordinary here. He’s being careful but delinquencies are basically none.

Wells Fargo Q3 earnings snapshot

Net income printed at $3.528 billion versus the year-ago $5.122 billionPer-share earnings fell significantly from $1.17 to 85 centsRevenue went up 4.0% on a year-over-year basis to $19.505 billionFactSet consensus was $1.09 of EPS on $18.775 billion in revenueSet aside $784 million in reserves; noninterest income was down 25%

CEO Charlie Scharf attributed the lower-than-expected profit to $2.0 billion charge primarily related to litigation and regulatory affairs.

Wall Street recommends that you invest in Wells Fargo stock. The average price target on it represents a 20% upside from here.

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