U.S. Bancorp (NYSE:USB) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. U.S. Bancorp reported US$5.6b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.99 beat expectations, being 5.0% higher than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the consensus forecast from U.S. Bancorp’s twelve analysts is for revenues of US$25.2b in 2022, which would reflect a meaningful 9.9% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to descend 15% to US$3.95 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$25.4b and earnings per share (EPS) of US$3.95 in 2022. So it’s pretty clear that, although the analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$60.93, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. The most optimistic U.S. Bancorp analyst has a price target of US$72.00 per share, while the most pessimistic values it at US$52.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting U.S. Bancorp’s growth to accelerate, with the forecast 13% annualised growth to the end of 2022 ranking favourably alongside historical growth of 2.7% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.5% per year. Factoring in the forecast acceleration in revenue, it’s pretty clear that U.S. Bancorp is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for U.S. Bancorp going out to 2024, and you can see them free on our platform here.
You can also view our analysis of U.S. Bancorp’s balance sheet, and whether we think U.S. Bancorp is carrying too much debt, for free on our platform here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.