U.S. Bancorp Shares Still Stuck

Banks have rebounded off of their December lows, but large banks have generally rebounded less strongly, and U.S. Bancorp (USB) less so than many of its peers. Although U.S. Bancorp doesn’t have the risk of a company like Bank of America (BAC) or Comerica (CMA) where a fading rate cycle takes away a major growth lever, and it does still have a high-quality set of fee-generating businesses, the company’s core operating footprint (excluding California) isn’t well-loved, operating profit growth is likely to meander in the mid-single-digits and the cycle as a whole is not favorable to banks with growing concerns about yield inversion and recession.

If you’re patient and don’t really care about how the shares perform over the next six to 12 months, U.S. Bancorp remains one of the best-run banks in the country and the shares are undervalued enough that they should generate an attractive double-digit long-term annualized return from here. PNC (PNC), Comerica, and JPMorgan (JPM) are just as cheap, or cheaper, though, and so I’d at least advise some “comparison shopping”.

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U.S. Bancorp Shares Still Stuck