The analyst firm lowered its 2015 EPS estimates for the regional bank to $3.23 a share from its previous estimate of $3.25. Credit Suisse also lowered its 2016 EPS estimates for U.S. Bancorp to $3.55 a share from $3.60 a share.
"Incorporating an expectation that the bank's net interest margin now bottoms in 3Q15 (rather than 2Q15) and figuring on a less robust acceleration in revenue growth, into 2016, we are reducing both our near term estimates and our DCFderived target price," analyst Susan Roth Katzke wrote.
Katzke added, "We'd be willing to pay more for the stock, but not without better revenue growth across all of the bank's businesses."
Separately, TheStreet Ratings team rates U S BANCORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate U S BANCORP (USB) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, expanding profit margins, increase in net income and increase in stock price during the past year. We feel its strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- USB's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 1.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- U S BANCORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, U S BANCORP increased its bottom line by earning $3.08 versus $3.01 in the prior year. This year, the market expects an improvement in earnings ($3.23 versus $3.08).
- The gross profit margin for U S BANCORP is currently very high, coming in at 87.98%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 27.44% trails the industry average.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Commercial Banks industry average. The net income increased by 2.4% when compared to the same quarter one year prior, going from $1,397.00 million to $1,431.00 million.
- You can view the full analysis from the report here: USB Ratings Report