US Bancorp Seeks to Start Growing Again

On Tuesday, US Bancorp (NYSE: USB  ) (NYSE: USB  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

US Bancorp occupies an interesting niche in the banking industry. As a superregional powerhouse, US Bancorp doesn't quite rise to Wall Street-bank status, but it still has an important role to play in the national economy from its vantage in Minneapolis. How is the company competing against its larger peers? Let's take an early look at what's been happening with US Bancorp over the past quarter and what we're likely to see in its quarterly report.

Stats on US Bancorp

Analyst EPS Estimate

$0.73

Change From Year-Ago EPS

9%

Revenue Estimate

$5.03 billion

Change From Year-Ago Revenue

2%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

Can you bank on US Bancorp's earnings this quarter?
Analysts have been fairly resolute in their expectations of US Bancorp's earnings over the past few months, cutting their call for the just-ended quarter by just a penny per share and reducing full-year 2013 earnings-per-share estimates by $0.02. The stock has seen a similarly muted response, rising just 4% since early January.

As with most banks, the big news for US Bancorp over the past quarter was its having passed the Federal Reserve's stress tests. The bank managed to improve its capital ratios by about half a percentage point compared with last year's stress tests, posting a better stressed-ratio figure than many of its larger peers.

One reason US Bancorp performed so well is that it lacks the big mortgage and credit card exposure that Wall Street banks have. In the stress-test scenario, Bank of America (NYSE: BAC  ) stood to suffer 43% of its projected losses from mortgages, home equity loans, and other home-related loans. Citigroup (NYSE: C  ) had 24% exposure to home loans and a whopping 43% of losses from credit cards. But US Bancorp has a much more traditional banking business, with just 16% of projected losses from mortgages and 21% from credit cards. Regular commercial and consumer loans, including commercial real-estate-related loans, make up the bulk of US Bancorp's potential loss exposure.

As a result of its stress-test results, US Bancorp got Fed permission to boost its dividend by 18%, giving it a yield of 2.7%. That's not a huge amount, but it's well above what B of A and Citi pay, especially as neither one sought to try to increase its token $0.01 quarterly payout.

In US Bancorp's earnings report, watch for signs of how the middle-American economy is doing. While most economists focus on the coasts, US Bancorp's exposure to the heartland fills in a big gap that you can use to build a more complete picture of the U.S. economy and its prospects going forward.

With big finance firms still trading at deep discounts to their historic norms, investors everywhere are wondering if this is the new normal, or whether finance stocks are a screaming buy today. The answer depends on the company, so to help figure out whether US Bancorp is a buy today, I invite you to read our premium research report on the company today. Click here now for instant access!

Click here to add US Bancorp to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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