5. U.S. Bancorp


Shares of U.S. Bancorp ( USB) of Minneapolis closed at $33.11 Thursday, trading for 2.4 times tangible book value, according to Thomson Reuters Bank Insight, and for 10 times the consensus 2014 earnings estimate of $3.30 a share, among analysts polled by Thomson Reuters. The consensus 2013 EPS estimate is $3.08.

Based on a quarterly payout of 19.5 cents, the shares have a dividend yield of 2.40%.

Early in January, U.S. Bancorp was featured by TheStreet among 5 bank stocks posting the best returns on average tangible common equity from the beginning of 2010 through the third quarter of 2011.

The company reported fourth-quarter net income of $1.420 billion, or 72 cents a share, declining from $1.474 billion, or 74 cents a share, in the third quarter, but increasing from $1.350 billion, or 69 cents a share, in the fourth quarter of 2011. The fourth-quarter results included $80 million in expenses tied to the $8.5 billion mortgage foreclosure settlement between federal regulators and the largest loan servicers.

USB's fourth-quarter return on average assets (ROA) was 1.62%, declining from 1.70% the previous quarter but matching the ROA a year earlier. The fourth-quarter return on average common equity was 15.6%, declining from 16.5% in the third quarter and 16.8% in the fourth quarter of 2011. Please see TheStreet's earnings coverage for much more detail on the company's results.

O'Connor's price target for U.S. Bancorp's shares is $38, and he estimates the company will earn $3.06 a share this year, with earnings increasing to $3.30 a share in 2014. The analyst includes USB among his two "top picks" for the banking sector, and said on Thursday that "USB now trades in line with peers on our 2013/2014 EPS and at a discount on our 2015E despite above average growth, higher ROA/ROEs and less risk in our view."

O'Connor also said that over the long-term, "USB should be the biggest beneficiaries of GSE reform among large banks and is well positioned for a pickup in consumer and commercial spending (payments represent 15-20% of revenue)."

USB Chart USB data by YCharts

Interested in more on U.S. Bancorp? See TheStreet Ratings' report card for this stock.

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