U.S. Bancorp Faces Market Struggles Despite Positive Q1 Results
Minneapolis, Minnesota-based U.S. Bancorp (USB) is a financial services company that offers a range of financial solutions for individuals, businesses, institutional organizations, governmental entities, and other financial institutions. With a market cap of $63.8 billion, USB provides services like lending, deposits, cash management, and investment.
Recent Performance Overview
Over the past year, USB has struggled compared to the broader market. The company’s shares have declined 2%, contrasting with the S&P 500 Index ($SPX), which has surged 8.2%. Year-to-date, USB is down 14.3%, while SPX shows a loss of 4.7%.
Comparative Analysis
Further narrowing the analysis, USB’s performance lags behind the iShares U.S. Regional Banks ETF (IAT), which saw a 4.9% gain over the past year and an 11.1% decline on a year-to-date basis.
Q1 Financial Results
After its Q1 earnings release on April 16, USB shares plunged 2.1%. The company reported a 3.6% year-over-year revenue growth, reaching $7 billion, driven primarily by increases in tax-equivalent net interest income and noninterest income. Positive trends in credit quality emerged as well; provisions for credit losses, net charge-offs, and non-performing assets all decreased compared to last year.
USB’s efficiency ratio improved to 60.8%, down from 66.4% in the prior-year quarter. Furthermore, disciplined expense management led to 270 basis points of positive adjusted operating leverage, contributing to a 14.4% year-over-year increase in adjusted earnings, amounting to $1.03 per share.
Future Earnings Expectations
For the current fiscal year, ending in December, analysts predict USB’s EPS to grow 8.3% year-over-year to $4.31. The company’s earnings surprise history is positive, having exceeded consensus estimates in each of the last four quarters.
Analyst Ratings and Price Targets
Among the 23 analysts covering USB, the consensus rating is a “Moderate Buy,” supported by 10 “Strong Buy,” three “Moderate Buy,” nine “Hold,” and one “Strong Sell” ratings. This outlook is slightly less bullish than a month ago, when 11 analysts rated it as a “Strong Buy.”
On May 5, Piper Sandler Companies (PIPR) analyst Scott Siefers reaffirmed a “Buy” rating for USB, setting a price target of $48, indicating a 17.1% potential upside. The mean price target of $50.17 suggests a premium of 22.4% from current prices, while the highest target of $60 implies a notable upside potential of 46.4%.
On the date of publication, Neharika Jain did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
