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U.S. Bancorp (USB) Down 3.6% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for U.S. Bancorp (USB - Free Report) . Shares have lost about 3.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is U.S. Bancorp due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
U.S. Bancorp's Q2 Earnings Beat on Lower Expenses
U.S. Bancorp’s second-quarter 2024 adjusted earnings per share (excluding the impact of notable items) of 98 cents beat the Zacks Consensus Estimate by 2%. However, the bottom line declined 12.5% from the prior-year quarter's level.
Results have benefited from higher deposits and lower expenses. However, a decline in net interest income (NII) was a major headwind.
Net income (GAAP basis) attributable to U.S. Bancorp was $1.60 billion, up 17.8% from the prior-year quarter's level.
Revenues & Expenses Fall
Total revenues in the reported quarter were $6.84 billion, down 4.4% year over year. The top line surpassed the Zacks Consensus Estimate by a whisker.
The tax-equivalent NII totaled $4.05 billion, down 8.9% from the year-ago quarter's level. The downside was primarily due to the impact of higher interest rates on deposit mix and pricing, partially offset by higher rates on earning assets and balance sheet optimization activities.
The net interest margin of 2.67% contracted 23 basis points year over year. Non-interest income moved up 3.3% year over year to $2.82 billion. The uptick was driven by a higher fee revenue across most categories.
Non-interest expenses declined 7.8% year over year to $4.21 billion. The fall was due to prudent expense management, continued focus on operational efficiency and synergies from the acquisition of MUFG Union Bank (MUB), partially offset by higher marketing and business development expenses.
The efficiency ratio was 61%, lower than the year-ago quarter’s figure of 63.7%. A decline in the ratio indicates an improvement in profitability.
Average total loans declined 3.6% to $374.69 billion from the year-ago quarter. Average total deposits increased 3.3% from the previous year's quarter level to $513.90 billion.
Credit Quality: Mixed Bag
Total allowance for credit losses was $7.93 billion, up 3.1% year over year. As of Jun 30, 2024, U.S. Bancorp’s non-performing assets amounted to $1.85 billion, up 70.7% from the year-ago period's level.
The increase in nonperforming assets was chiefly due to higher commercial and commercial real estate nonperforming loans.
Net charge-offs were $538 million, down from $649 million in the year-ago quarter. The provision for credit losses in the reported quarter was $568 million, down 30.8% from the prior-year quarter's level.
Capital Ratios Improve
The Tier 1 capital ratio was 11.9% as of Jun 30, 2024, up from 10.6% in the prior-year quarter. The Common Equity Tier 1 capital ratio under the Basel III standardized approach was 10.3% as of Jun 30, 2024, up from 9.1% in the year-ago quarter.
The tangible common equity to tangible assets ratio was 5.4%, up from the prior-year quarter’s 4.8%.
Outlook
Second Quarter 2024
Management expects NII to be relatively stable compared with $4.05 billion in the second quarter of 2024.
Full Year 2024
Management expects NII to be in the range of $16.1 - $16.4 billion.
Total adjusted non-interest income is projected to grow by mid-single digit compared with $10.8 billion in 2023.
Total adjusted non-interest expense is expected to be $16.8 billion or lower.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, U.S. Bancorp has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, U.S. Bancorp has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
U.S. Bancorp is part of the Zacks Banks - Major Regional industry. Over the past month, JPMorgan Chase & Co. (JPM - Free Report) , a stock from the same industry, has gained 0.8%. The company reported its results for the quarter ended June 2024 more than a month ago.
JPMorgan Chase & Co. reported revenues of $50.2 billion in the last reported quarter, representing a year-over-year change of +21.5%. EPS of $4.40 for the same period compares with $4.37 a year ago.
JPMorgan Chase & Co. is expected to post earnings of $4.06 per share for the current quarter, representing a year-over-year change of -6.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.4%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for JPMorgan Chase & Co. Also, the stock has a VGM Score of F.
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U.S. Bancorp (USB) Down 3.6% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for U.S. Bancorp (USB - Free Report) . Shares have lost about 3.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is U.S. Bancorp due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
U.S. Bancorp's Q2 Earnings Beat on Lower Expenses
U.S. Bancorp’s second-quarter 2024 adjusted earnings per share (excluding the impact of notable items) of 98 cents beat the Zacks Consensus Estimate by 2%. However, the bottom line declined 12.5% from the prior-year quarter's level.
Results have benefited from higher deposits and lower expenses. However, a decline in net interest income (NII) was a major headwind.
Net income (GAAP basis) attributable to U.S. Bancorp was $1.60 billion, up 17.8% from the prior-year quarter's level.
Revenues & Expenses Fall
Total revenues in the reported quarter were $6.84 billion, down 4.4% year over year. The top line surpassed the Zacks Consensus Estimate by a whisker.
The tax-equivalent NII totaled $4.05 billion, down 8.9% from the year-ago quarter's level. The downside was primarily due to the impact of higher interest rates on deposit mix and pricing, partially offset by higher rates on earning assets and balance sheet optimization activities.
The net interest margin of 2.67% contracted 23 basis points year over year.
Non-interest income moved up 3.3% year over year to $2.82 billion. The uptick was driven by a higher fee revenue across most categories.
Non-interest expenses declined 7.8% year over year to $4.21 billion. The fall was due to prudent expense management, continued focus on operational efficiency and synergies from the acquisition of MUFG Union Bank (MUB), partially offset by higher marketing and business development expenses.
The efficiency ratio was 61%, lower than the year-ago quarter’s figure of 63.7%. A decline in the ratio indicates an improvement in profitability.
Average total loans declined 3.6% to $374.69 billion from the year-ago quarter. Average total deposits increased 3.3% from the previous year's quarter level to $513.90 billion.
Credit Quality: Mixed Bag
Total allowance for credit losses was $7.93 billion, up 3.1% year over year. As of Jun 30, 2024, U.S. Bancorp’s non-performing assets amounted to $1.85 billion, up 70.7% from the year-ago period's level.
The increase in nonperforming assets was chiefly due to higher commercial and commercial real estate nonperforming loans.
Net charge-offs were $538 million, down from $649 million in the year-ago quarter. The provision for credit losses in the reported quarter was $568 million, down 30.8% from the prior-year quarter's level.
Capital Ratios Improve
The Tier 1 capital ratio was 11.9% as of Jun 30, 2024, up from 10.6% in the prior-year quarter. The Common Equity Tier 1 capital ratio under the Basel III standardized approach was 10.3% as of Jun 30, 2024, up from 9.1% in the year-ago quarter.
The tangible common equity to tangible assets ratio was 5.4%, up from the prior-year quarter’s 4.8%.
Outlook
Second Quarter 2024
Management expects NII to be relatively stable compared with $4.05 billion in the second quarter of 2024.
Full Year 2024
Management expects NII to be in the range of $16.1 - $16.4 billion.
Total adjusted non-interest income is projected to grow by mid-single digit compared with $10.8 billion in 2023.
Total adjusted non-interest expense is expected to be $16.8 billion or lower.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, U.S. Bancorp has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, U.S. Bancorp has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
U.S. Bancorp is part of the Zacks Banks - Major Regional industry. Over the past month, JPMorgan Chase & Co. (JPM - Free Report) , a stock from the same industry, has gained 0.8%. The company reported its results for the quarter ended June 2024 more than a month ago.
JPMorgan Chase & Co. reported revenues of $50.2 billion in the last reported quarter, representing a year-over-year change of +21.5%. EPS of $4.40 for the same period compares with $4.37 a year ago.
JPMorgan Chase & Co. is expected to post earnings of $4.06 per share for the current quarter, representing a year-over-year change of -6.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.4%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for JPMorgan Chase & Co. Also, the stock has a VGM Score of F.