U.S. Bancorp Reaffirmed at Neutral - Analyst Blog
December 30 2011 - 10:45AM
Zacks
We are reiterating our Neutral recommendation on U.S.
Bancorp (USB) stock.
U.S. Bancorp’s third-quarter 2011 earnings of 64 cents were
slightly ahead of the Zacks Consensus Estimate of 61 cents,
reflecting an improvement in credit metrics given a decline in
provision for credit losses coupled with modest revenue growth.
However, these positives were partially offset by an increase in
non-interest expenses and taxes.
U.S. Bancorp remains one of the most profitable large-cap banks
in the industry. The company has weathered the economic downturn
relatively well. Its core franchisee is attractive and the
diverse revenue stream is encouraging. Going forward, we expect
strategic acquisitions to help its top-line growth.
In recent years, U.S. Bancorp has been an active acquirer on the
processing side of the business. The payment business is expected
to continue to help maintain growth in an otherwise unfavorable
operating environment.
Recently, U.S. Bancorp’s unit, Elan Financial Services, acquired
$700 million in Financial Institution credit card portfolios from
FIA Card Services, N.A., Bank of America Corp.’s
(BAC) credit-card unit. The portfolio acquired by the U.S. Bancorp
unit comprises credit card assets of 28 financial institutions and
includes small business and consumer cards. Terms of the deal were
not disclosed.
Improving credit quality, solid capital levels and a focus on
capital redeployment also bode well. Yet, a sluggish economic
recovery and low interest rate environment, as well as
regulatory issues, will continue to
restrict any robust development at
the company. Hence, our Neutral recommendation on the stock
remains in place.
U.S. Bancorp currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. Considering the fundamentals we have
a Neutral recommendation on the stock.
BANK OF AMER CP (BAC): Free Stock Analysis Report
US BANCORP (USB): Free Stock Analysis Report
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