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U.S. Bancorp (USB), founded in 1863 and headquartered in Minneapolis, Minnesota, is one of the largest financial institutions in the U.S. With a market cap of $74.6 billion, USB offers various financial services, including consumer and commercial banking, wealth management, payment services, and investment banking. The company is scheduled to release its Q4 earnings before the market opens on Thursday, Jan. 16.
Ahead of this event, analysts expect the bank to report a profit of $1.06 per share, up 7.1% from $0.99 per share in the year-ago quarter. The company has beaten or matched Wall Street's bottom-line estimates in the past four quarters.
The company reported an EPS of $1.03 in the most recent quarter, surpassing the consensus EPS estimate by 3%. U.S. Bancorp's Q3 performance was driven by higher net interest income and disciplined expense management despite securities losses and lower noninterest income.
For fiscal 2024, analysts expect U.S. Bancorp to report EPS of $3.93, down 8.8% from $4.31 in fiscal 2023. However, in fiscal 2025, EPS is expected to rebound, growing by 9.9% year-over-year to $4.32.
USB stock has underperformed compared to the S&P 500 Index’s ($SPX) impressive 23.3% gains over the past 52 weeks, with its shares rising only 10.5% during this period. Additionally, USB has lagged behind the iShares U.S. Financial Services ETF (IYG), which rallied 30.3% over the same time frame.
U.S. Bancorp's recent performance dip paints a vivid picture of the challenges posed by a shifting economic landscape. Higher interest rates reshaped the deposit mix and pricing dynamics, slicing into other revenues. Meanwhile, a net loss from the sale of securities and reduced service charges added to the strain, spotlighting the headwinds the bank faces in navigating this complex environment.
However, on Nov. 25, U.S. Bancorp gained over 2% after Citigroup upgraded the stock from "Neutral" to "Buy", citing a $65 price target. Earlier, on Oct. 16, USB stock rallied over 4% after the company reported its Q3 earnings. The total quarterly revenues amounted to $6.86 billion, down 2.4% year over year, with non-interest income at $2.7 billion, also down 2.4% from the previous year.
Analysts' consensus view on USB stock is "Moderate Buy." Out of 22 analysts covering the stock, eight advise a "Strong Buy," two indicate a “Moderate Buy,” and 12 suggest a “Hold” rating.
The average analyst price target for USB is $56.59, indicating a potential upside of 18.3% from the current levels.
