Valuation is a tricky thing. As I’ve said on multiple occasions, stocks don’t go up simply because they’re cheap (nor down simply because they’re expensive), and while U.S. Bancorp (USB) does look undervalued on a long-term earnings basis, the company’s conservative approach and consumer-oriented business model is definitely out of step with the risk-on focus of bank investors today.
I continue to believe that U.S. Bancorp can generate long-term earnings growth in the neighborhood of 3%, and that the shares are meaningfully undervalued on that basis. I also believe, though, that it could take some time for this stock to work, as the bank’s robust payments business is more tied to a consumer spending recovery and some analysts and investors continue to fret that management’s priorities are out of step with the new realities of the banking sector.
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Conservative And Consumer-Oriented, U.S. Bancorp Isn't In Vogue
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