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Minneapolis, Minnesota-based U.S. Bancorp (USB) is a financial services company that provides various financial services to individuals, businesses, institutional organizations, governmental entities, and other financial institutions. Valued at a market cap of $63.8 billion, the company provides a wide range of financial services, including lending, deposits, cash management, and investment services.
This financial services company has underperformed the broader market over the past 52 weeks. Shares of USB have declined 2% over this time frame, while the broader S&P 500 Index ($SPX) has surged 8.2%. Moreover, on a YTD basis, the stock is down 14.3%, compared to SPX’s 4.7% loss.
Narrowing the focus, USB’s underperformance looks pronounced when compared to the iShares U.S. Regional Banks ETF’s (IAT) 4.9% gain over the past 52 weeks and 11.1% dip on a YTD basis.
On Apr. 16, shares of USB plunged 2.1% after its Q1 earnings release. The company’s revenue grew 3.6% year-over-year to $7 billion, mainly due to an increase in both tax-equivalent net interest income and noninterest income. Adding to the positives, USB’s credit quality showed improvement, as provisions for credit losses, net charge-offs, and non-performing assets all declined compared to the same period last year. Its efficiency ratio improved to 60.8%, down from 66.4% in the prior-year quarter. Additionally, the company maintained disciplined expense management and achieved 270 basis points of positive adjusted operating leverage. These efforts contributed to a 14.4% year-over-year increase in its adjusted earnings to $1.03 per share.
For the current fiscal year, ending in December, analysts expect USB’s EPS to grow 8.3% year over year to $4.31. The company’s earnings surprise history is promising. It topped the consensus estimates in each of the last four quarters.
Among the 23 analysts covering the stock, the consensus rating is a “Moderate Buy” which is based on 10 “Strong Buy,” three “Moderate Buy,” nine “Hold,” and one “Strong Sell” rating.
This configuration is slightly less bullish than a month ago, with 11 analysts suggesting a “Strong Buy” rating, and two recommending “Moderate Buy.”
On May 5, Piper Sandler Companies (PIPR) analyst Scott Siefers maintained a “Buy” rating on USB and set a price target of $48, which indicates a 17.1% potential upside from the current levels.
The mean price target of $50.17 represents a 22.4% premium from USB’s current price levels, while the Street-high price target of $60 suggests a notable upside potential of 46.4%.
