My investing muse - have you bought this $USB yet? (20Jan2022)

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 ‌$U.S. Bancorp(USB)$  ‌price fell after a disappointing earnings report as of 19 Jan 2022.  Does this imply a signal to sell?


Q4 EPS falls from Q3, on lower net interest income, lower loan fees (SBA Paycheck Protection Program), "seasonally" lower payments and capital markets revenue, and lower mortgage banking revenue as refinancing continued to decline. Q4 EPS of $1.07 dropped from $1.30 in Q3 2021 but it was an increase from $0.95 in Q4 2020; a marginal miss of market estimate at $1.10.

Net income attributable to U.S. Bancorp was $1,673 million for the fourth quarter of 2021, which was $154 million higher than the $1,519 million for the fourth quarter of 2020, and $355 million lower than the $2,028 million for the third quarter of 2021. Diluted earnings per common share were $1.07 in the fourth quarter of 2021, compared with $0.95 in the fourth quarter of 2020 and $1.30 in the third quarter of 2021.

For full-year 2021, earnings per share came in at $5.10 per share, marginally missing the Estimate of $5.13. Nonetheless, the earnings figure compares favourably with the prior-year tally of $3.06 per share (2020) an impressive 66.6% growth YoY.

Before we direct our interest to another, let us note that the income statement, balance sheet and cash flow has improved YoY.  Comparing full-year performance, USB saw a great increase in net income from $4,985 million (2020) to $7,985 million (2021), an outstanding 60% growth.  It is heartening to see a drop in long term debt from $41,297 million (2020) to $32,125 million (2021).

one day does not define life and neither will 1 quarter's marginal miss.  Putting together strong earnings, a strong balance sheet and good cash flow, USB remains a sound investment.  At the closing price of $57.37 (as per the end of 19 Jan 2022 trading day), it is considered "undervalued" with Intrinsic value at about $62+/-from the sources.  This may be one of the few opportunities we use to invest in a good bank before the coming interest rates increase.

Personally, let us wait for 1D chart to bottom-up before investing.  Please kindly do the due diligence before investing.


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