U.S. Bancorp (USB): Revisiting Valuation After Prime Rate Cut, Dividend Hike, and New Buyback Plan
U.S. Bancorp (USB) just paired a cut in its prime lending rate to 6.75% with a higher quarterly dividend and a fresh share repurchase plan, a move that signals management’s confidence in both earnings durability and capital strength.
See our latest analysis for U.S. Bancorp.
The backdrop to these moves is a steadily improving share price narrative, with an 11.6% year to date share price return and a 47.5% five year total shareholder return suggesting momentum is gradually rebuilding as investors reassess U.S. Bancorp’s earnings power and risk profile.
If this kind of steady bank story has you thinking about where else value might be hiding in financials, it is worth exploring fast growing stocks with high insider ownership as a curated set of potential next ideas.
Yet with the stock trading modestly below analyst targets but at a premium to many regional peers, is U.S. Bancorp still undervalued on its fundamentals, or is the market already pricing in most of the recovery?
Most Popular Narrative Narrative: 4% Undervalued
With the narrative fair value sitting modestly above the last close, U.S. Bancorp is framed as a steady compounder rather than a speculative swing.
The analysts have a consensus price target of $53.604 for U.S. Bancorp based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $67.0, and the most bearish reporting a price target of just $47.0.
Want to see how modest growth assumptions, margin compression, and a richer future earnings multiple still add up to upside potential? The full narrative explains the calculations behind that tension.
Result: Fair Value of $55.63 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, challenges such as intensifying fintech competition and lingering commercial real estate risks could quickly undermine the earnings and valuation narrative if conditions deteriorate.
Find out about the key risks to this U.S. Bancorp narrative.
Build Your Own U.S. Bancorp Narrative
If you would rather examine the numbers yourself and question these assumptions, you can build a personalized view in just a few minutes: Do it your way.
A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding U.S. Bancorp.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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