Is USB a good stock to buy? We came across a bullish thesis on U.S. Bancorp on Danny’s Substack by Danny Green. In this article, we will summarize the bulls’ thesis on USB. U.S. Bancorp’s share was trading at $57.00 as of April 20th. USB’s trailing and forward P/E were 11.95 and 11.34 respectively according to Yahoo Finance.
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U.S. Bancorp, a financial services holding company, provides various financial services to individuals, businesses, institutional organizations, governmental entities, and other financial institutions in the United States. USB operates within a macro environment that remains moderately challenging but manageable, as reflected in its record ~$7.33B net revenue in Q3 2025 and resilient net interest income growth despite mixed economic conditions.
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Its diversified revenue base, with fee income contributing roughly 42%, helps offset cyclicality in loan demand, although the bank remains inherently exposed to interest rate movements, economic growth, and credit trends that can influence margins and asset quality. Macroeconomic uncertainties such as inflation and geopolitical risks continue to pose potential pressure on credit performance, but diversification limits direct volatility.
Fundamentally, USB is showing clear improvement, with net income rising ~16.7% YoY and EPS up ~18.4%, supported by net interest margin expansion to ~2.75% and an improved efficiency ratio of ~57.2%. Fee income growth of ~9.5% highlights the strength of its diversified model, though modest net interest income growth underscores ongoing sensitivity to rate dynamics. The bank blends stock-specific strengths with sector exposure, leveraging its broad footprint across consumer, commercial, payments, and wealth businesses while investing in digital initiatives such as embedded fintech and digital asset custody.
USB maintains a strong banking franchise, generating ~18.6% returns on tangible common equity and holding solid capital levels (CET1 ~10.9%), though its moat remains moderate given competition and credit cycle exposure. Capital allocation is disciplined, with consistent dividends, ongoing buybacks, and selective growth investments. While risks include credit deterioration and margin compression, the risk/reward remains attractive, supported by potential NIM expansion toward ~3%, fee growth, and continued capital returns, making USB a compelling core holding with measured upside potential.
Previously, we covered a bullish thesis on JPMorgan Chase & Co. (JPM) by Pacific Northwest Edge in March 2025, which highlighted the bank’s dominant market position, massive deposit base, capital return through buybacks, and resilience during financial crises. JPM’s stock price has appreciated by approximately 32.57% since our coverage. Danny Green shares a similar view but emphasizes on diversified fee income, improving margins, and digital-driven growth at U.S. Bancorp (USB).
U.S. Bancorp is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 57 hedge fund portfolios held USB at the end of the fourth quarter which was 56 in the previous quarter. While we acknowledge the risk and potential of USB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than USB and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
