On Tuesday, U.S. Bancorp (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 U.S. Bancorp (NYSE:USB) 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|
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 U.S. Bancorp (NYSE:USB) 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 Corp (NYSE:BAC) stood to suffer 43% of its projected losses from mortgages, home equity loans, and other home-related loans. Citigroup Inc. (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.