U.S. Bancorp (USB) Shows Signs Of Being Water-Logged And Getting Wetter

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified U.S. Bancorp ( USB) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified U.S. Bancorp as such a stock due to the following factors:

  • USB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $229.5 million.
  • USB has traded 880,577 shares today.
  • USB traded in a range 215.4% of the normal price range with a price range of $0.92.
  • USB traded below its daily resistance level (quality: 39 days, meaning that the stock is crossing a resistance level set by the last 39 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on USB:

U.S. Bancorp, a financial services holding company, provides a range of financial services in the United States. The stock currently has a dividend yield of 2.3%. USB has a PE ratio of 14.3. Currently there are 5 analysts that rate U.S. Bancorp a buy, 1 analyst rates it a sell, and 16 rate it a hold.

The average volume for U.S. Bancorp has been 6.2 million shares per day over the past 30 days. U.S has a market cap of $78.1 billion and is part of the financial sector and banking industry. The stock has a beta of 0.70 and a short float of 1.1% with 4.87 days to cover. Shares are up 7.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates U.S. Bancorp as a buy. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 66.18% to $2,772.00 million when compared to the same quarter last year. In addition, U S BANCORP has also vastly surpassed the industry average cash flow growth rate of -42.40%.
  • U S BANCORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, U S BANCORP increased its bottom line by earning $3.01 versus $2.84 in the prior year. This year, the market expects an improvement in earnings ($3.10 versus $3.01).
  • The gross profit margin for U S BANCORP is currently very high, coming in at 86.78%. 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 27.23% trails the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • USB, with its decline in revenue, slightly underperformed the industry average of 2.6%. Since the same quarter one year prior, revenues slightly dropped by 2.8%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.

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