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Here's Why You Should Buy U.S. Bancorp (USB) Stock Right Now
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U.S. Bancorp (USB - Free Report) stock looks like an attractive investment option now. The company is well-positioned for organic and inorganic growth, given its solid balance sheet and liquidity position, and strategic partnerships and acquisitions.
Analysts seem optimistic regarding the earnings growth prospects for this Zacks Rank #2 (Buy) stock. Over the past 30 days, the Zacks Consensus Estimate for USB’s 2024 earnings has been revised 1.8% upward.
In the past month, shares of USB have gained 3.8% against the industry’s decline of 5.4%.
Image Source: Zacks Investment Research
A few factors mentioned below make the stock worth betting on now.
Earnings Growth: U.S. Bancorp witnessed earnings growth of 3.11% over the past three to five years. This was largely driven by the company’s organic growth strategy, product expansion and opportunistic expansions.
Also, the company has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average beat being 1.04%.
While the Zacks Consensus Estimate for earnings indicates a 9.51% decline on a year-over-year basis in 2024, earnings are projected to rebound and grow at the rate of 8.9% in 2025.
Revenue Strength: Driven by diversified revenue streams, and decent loan and deposit growth, U.S Bancorp’s total revenues witnessed a compound annual growth rate (CAGR) of 10.4% over the last four years (2019-2023). Although revenues declined in the first half of 2024, USB’s efforts to enhance its range of products, services and capabilities will support its fee income growth, driving revenue growth in the near term.
Although the Zacks Consensus Estimate for revenues indicates a decline of 2.3% in 2024, it will rebound and grow 3.7% in 2025.
Synergies From Opportunistic Buyouts and Partnerships: U.S. Bancorp has made several strategic acquisitions in the past years, which have opened new markets to it and fortified existing markets.
In June 2024, U.S. Bancorp partnered with Greenlight Financial Technology, Inc. to offer an advanced banking solution for families. USB is the first financial institution to provide Greenlight with an embedded mobile app experience, leveraging Greenlight’s new software development kit. This will allow USB to have a competitive advantage in the market.
In 2022, U.S. Bancorp completed the acquisition of MUFG Union Bank’s core regional banking franchise, expanding its branch network and enjoying greater access to digital banking tools. In 2023, cost synergies of $900 million were realized from this merger.
In 2021, USB completed the buyout of PFM Asset Management, amplifying its presence in the institutional asset management space nationwide. In 2021, it acquired San Francisco-based fintech firm TravelBank and Bento Technologies to accelerate its digital services. These acquisitions, combined with the ongoing investments in innovative product enhancements, services and people, strengthened the company’s fee-based businesses.
Impressive Dividends: U.S. Bancorp’s dividend payouts are encouraging. Following the 2024 stress test results, it plans to increase dividends by 2% to 50 cents per share, effective from the fourth quarter of 2024. Before this, in September 2023, the company announced a hike in its dividend by 2.1% to 49 cents per share. Further, the company has hiked its dividend four times during the last five years. The five-year annualized dividend growth is 4.7%, with a 50% dividend payout ratio.
Strong Balance Sheet Position: As of Jun 30, 2024, the company had a long-term debt of $52.72 billion. Cash and due from banks was $65.83 billion as of the same date, reflecting a strong liquidity position. Hence, given a strong liquidity profile, USB seems well-positioned to continue meeting debt obligations and sustain its capital distribution activities.
First United’s earnings estimates for 2024 have been revised 9.1% upward in the past 30 days. FUNC’s shares have gained 22.3% over the past six months.
Independent Bank’s 2024 earnings estimates have revised 6.5% upward in the past 30 days. INDB’s shares have gained 8.7% over the past six months.
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Here's Why You Should Buy U.S. Bancorp (USB) Stock Right Now
U.S. Bancorp (USB - Free Report) stock looks like an attractive investment option now. The company is well-positioned for organic and inorganic growth, given its solid balance sheet and liquidity position, and strategic partnerships and acquisitions.
Analysts seem optimistic regarding the earnings growth prospects for this Zacks Rank #2 (Buy) stock. Over the past 30 days, the Zacks Consensus Estimate for USB’s 2024 earnings has been revised 1.8% upward.
In the past month, shares of USB have gained 3.8% against the industry’s decline of 5.4%.
Image Source: Zacks Investment Research
A few factors mentioned below make the stock worth betting on now.
Earnings Growth: U.S. Bancorp witnessed earnings growth of 3.11% over the past three to five years. This was largely driven by the company’s organic growth strategy, product expansion and opportunistic expansions.
Also, the company has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average beat being 1.04%.
While the Zacks Consensus Estimate for earnings indicates a 9.51% decline on a year-over-year basis in 2024, earnings are projected to rebound and grow at the rate of 8.9% in 2025.
Revenue Strength: Driven by diversified revenue streams, and decent loan and deposit growth, U.S Bancorp’s total revenues witnessed a compound annual growth rate (CAGR) of 10.4% over the last four years (2019-2023). Although revenues declined in the first half of 2024, USB’s efforts to enhance its range of products, services and capabilities will support its fee income growth, driving revenue growth in the near term.
Although the Zacks Consensus Estimate for revenues indicates a decline of 2.3% in 2024, it will rebound and grow 3.7% in 2025.
Synergies From Opportunistic Buyouts and Partnerships: U.S. Bancorp has made several strategic acquisitions in the past years, which have opened new markets to it and fortified existing markets.
In June 2024, U.S. Bancorp partnered with Greenlight Financial Technology, Inc. to offer an advanced banking solution for families. USB is the first financial institution to provide Greenlight with an embedded mobile app experience, leveraging Greenlight’s new software development kit. This will allow USB to have a competitive advantage in the market.
In 2022, U.S. Bancorp completed the acquisition of MUFG Union Bank’s core regional banking franchise, expanding its branch network and enjoying greater access to digital banking tools. In 2023, cost synergies of $900 million were realized from this merger.
In 2021, USB completed the buyout of PFM Asset Management, amplifying its presence in the institutional asset management space nationwide. In 2021, it acquired San Francisco-based fintech firm TravelBank and Bento Technologies to accelerate its digital services. These acquisitions, combined with the ongoing investments in innovative product enhancements, services and people, strengthened the company’s fee-based businesses.
Impressive Dividends: U.S. Bancorp’s dividend payouts are encouraging. Following the 2024 stress test results, it plans to increase dividends by 2% to 50 cents per share, effective from the fourth quarter of 2024. Before this, in September 2023, the company announced a hike in its dividend by 2.1% to 49 cents per share. Further, the company has hiked its dividend four times during the last five years. The five-year annualized dividend growth is 4.7%, with a 50% dividend payout ratio.
Strong Balance Sheet Position: As of Jun 30, 2024, the company had a long-term debt of $52.72 billion. Cash and due from banks was $65.83 billion as of the same date, reflecting a strong liquidity position. Hence, given a strong liquidity profile, USB seems well-positioned to continue meeting debt obligations and sustain its capital distribution activities.
Other Finance Stocks to Consider
Some other top-ranked finance stocks are First United Corporation (FUNC - Free Report) and Independent Bank Corp. (INDB - Free Report) , each sporting a Zacks Rank #1(Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
First United’s earnings estimates for 2024 have been revised 9.1% upward in the past 30 days. FUNC’s shares have gained 22.3% over the past six months.
Independent Bank’s 2024 earnings estimates have revised 6.5% upward in the past 30 days. INDB’s shares have gained 8.7% over the past six months.