U.S. Bancorp Stock Is a Banking Bet to Buy Now


  • U.S. Bancorp (USB) stock suffered collateral damage due to the failures of SVB Financial Group (SIVBQ) and Signature Bank (SBNY).
  • Yet, U.S. Bancorp isn’t like those problem-ridden banks, and it offers a prime value-and-yield combo for investors.
  • Right now is a great time to start or add to a long position in USB stock.
USB stock - U.S. Bancorp Stock Is a Banking Bet to Buy Now

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Are all regional American banks the same? Definitely not! U.S. Bancorp (NYSE:USB) stands apart from failed banks for being consistently profitable while respecting shareholders with generous dividend payouts. At the end of the day, you’ll surely find that USB stock didn’t deserve its recent sharp drawdown and is poised for a swift comeback.

It’s understandable that some folks are worried about the American banking system. After all, SVB Financial Group (OTCMKTS:SIVBQ) subsidiary Silicon Valley Bank and Signature Bank (OTCMKTS:SBNY) famously collapsed in March.

This doesn’t mean investors should shun U.S. Bancorp, however. Indeed, value hunters ought to take a close look at U.S. Bancorp, and maybe even think about starting a share position in this hidden gem today.

USB Stock Was Unjustifiably Clobbered

USB stock was typically a $40 or $50 stock before the banking blowup happened in March. However, the U.S. Bancorp share price cratered to the $35 area due to the contagion fears surrounding Silicon Valley Bank and Signature Bank.

Yet, there’s no reason to jump to conclusions about U.S. Bancorp. The company didn’t take its depositors’ funds and drastically over-invest them in government bonds or cryptocurrency. Plus, there’s no need to worry about a bank run. During the financial sector turmoil, a U.S. Bancorp spokesperson assured, “Our deposit flows are not only stable, we are adding new accounts and new customers every day.”

Baird analyst David George is also confident about U.S. Bancorp’s stability. Even during a banking crisis, George upgraded his rating on UBS stock from “neutral” to “outperform,” issuing an ambitious price target of $52. Furthermore, the analyst assured that U.S. Bancorp is a “high-quality regional bank with little to no downside and (about) 50% upside over time.”

U.S. Bancorp Offers Value and Yield

Along with that comment, George also described the risk-to-reward trade-off with U.S. Bancorp shares as “very attractive.” Don’t just take the analyst’s word for it, though; everyone has to do his or her own due diligence. However, there are features that long-term investors should find to be very enticing about U.S. Bancorp.

First and foremost, U.S. Bancorp is a consistently profitable company — no banking failure to be found here. This might help you sleep soundly at night if the headlines about a financial sector implosion are making you nervous.

Next, many successful traders like to collect dividend distributions, which I feel is a great way to build wealth over time. Thankfully, U.S. Bancorp pays a highly generous 5.31% forward annual dividend yield. This easily beats the sector average yield of 2.114%.

Finally, U.S. Bancorp offers a great value, as the company’s trailing-12-month price-to-earnings (P/E) ratio of 9.69x is below U.S. Bancorp’s five-year average of 12.43x. Moreover, the company’s P/E ratio is quite close to the sector median of 9.44x.

What You Can Do Now

As you can see, American regional banks aren’t all the same. U.S. Bancorp really shouldn’t be placed into the same category as Silicon Valley Bank and Signature Bank. After all, U.S. Bancorp is consistently profitable and not in jeopardy of having its deposits drained.

Besides, there are valid reasons why value-focused investors would choose to own a stake in U.S. Bancorp. So, if you’d like to aim for relatively risk-reduced returns with a banking sector standout, give USB stock a try today.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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