How Will U.S. Bancorp (USB) Stock Rebound From Earnings Results?

NEW YORK (TheStreet) -- U.S. Bancorp (USB) shares are down -1.6% to $42.59 on Wednesday despite posting second quarter earnings and revenue results ahead of analysts expectations.

The financial services holding company reported a record net income of $1.5 billion, or 78 cents per diluted share, beating analysts estimates by 1 cent.

The company also reported revenue of $5.2 billion in the quarter, 5% better than it reported in the same period a year ago.

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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 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 analysis by TheStreet Ratings Team goes as follows:

  • 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.
  • You can view the full analysis from the report here: USB Ratings Report
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