6 Sept 2021
The Sparse Upside of U.S Bancorp Stock
The Index Today
U.S Bancorp Stock (NYE:USB) is one of the leading banks with approximately $550 billion in assets. The bank gained 23%, increasing for $47 to $57 and outperforming the S&P.
Many reason have been pointed out for this performance which include the U.S governments approval of the $1.9 trillion covid relief package, the increased covid vaccination roll out and the Fed’s interest rates decision. All these reasons point out to the current economic recovery.
It is estimated that the Banks valuation would average around $63 per share which his almost 10% above the market price. Bankcorp is a commercial bank and earns revenue through banking products and income loans. In 2020, the organization reported $23.2 billion in revenue which was caused by 6% growth in non-interest income. Other than that, the bank makes 55% of its income from net interest income.
The organization released its second quarter report for the current year showing higher than estimated earnings. Total revenue was reported at $5.76 billion, wholesale revenues dropped 23% and consumer banking revenue dropped 3%. But the decline was met with a 19% increase in the area of payment services unit.
Bankcorp has indicated it will see an improvement in net income this year as it is planning to make improvements in its card and payment transaction volumes. The organization has a loan portfolio of $297 billion and may be sensitive to change in interest rate. Last year, the loan default rate went up due to Covid crisis and it had to increase its provisions for credit losses to $3.8 billion.