Q1 Preview: U.S. Bancorp (USB) Should Beat, Though Slowing Loan Growth May Bog Results
StreetInsider / April 18, 2011
U.S. Bancorp (USB) shares are trading lower Monday ahead of first-quarter earnings expected out before the market opens Tuesday, April 19th. Shares are down 1.4 percent this afternoon.
USB is expected to report EPS of $0.49 on revenue of $4.47 billion. Last quarter, the bank posted EPS of $0.49 on sales of $4.72 billion, both beating the consensus. Looking back at Q1 of last year, USB issued EPS of $0.34 on revenue of $4.32 billion.
Shares fell 1.2 percent during the quarter and are 3.4 percent lower since.
USB is trading at 9.9x FY12 EPS estimates, compared with a 6.7x multiple for Bank of America (NYSE: BAC), 7.7x for JPMorgan (NYSE: JPM) and 8.2x for Wells Fargo & Co. (NYSE: WFC).
Data from Bloomberg has 20 analysts with a Buy on USB, 14 with a Hold, and two suggesting to Sell. The analyst price target average is $30.60, with a high of $34 and low of $21. Shares have traded in a range of $28.94 - $20.44 over the last 52-weeks.
Analyst Summary
JPMorgan is looking for EPS of $0.48 from the bank. The firm expects USB to "outperform large-cap banks as investors remain skittish and seek higher quality names with lesser risk due to concerns about issues such as mortgage repurchases, some uncertainty about the economic recovery, and political uncertainty."
Additionally, "USB should trade at a higher P/E multiple on a normalized basis, which implies significant potential stock upside."
JPMorgan maintains an Overweight rating and $34 price target on USB shares.
Deutsche Bank seeking EPS of $0.49. The firm believes net interest margin will be impacted by growth in its securities portfolio, probably by about five to eight basis points. The additions to the portfolio are for USB to meet the liquidity coverage ratio under Basel 3.
Loan growth will slow somewhat in Q1 on a sequential basis, roughly a three-percent increase driven by commercial mortgage, card, residential mortgage, and less loan runoff than other large banks. Deutsche also expects "core expenses to be down 12% q/q annualized (mostly driven by seasonality) and USBs efficiency ratio to remain at the higher end of its guided range."
Deutsche Bank maintains a Hold rating and $28 price target on the stock |
