U.S. Bancorp USB is scheduled to report second-quarter 2020 results on July 15, before the opening bell. The company’s revenues and earnings are likely to have witnessed a year-over-year decline.
Before we look at the factors that might have impacted second-quarter earnings, let’s take a look at the company’s performance in the last few quarters.
Notably, U.S. Bancorp displays a decent earnings surprise history. It surpassed estimates in three of the trailing four quarters, the average positive surprise being 13.1%.
U.S. Bancorp Price and EPS Surprise
Key Factors to Note
Net Interest Income Lower: A decent lending scenario, mainly in the commercial & industrial loans front, is expected to have supported net interest income (NII) during the quarter. However, a decline in consumer loans amid coronavirus outbreak might have been an offsetting factor.
Also, a decline in interest rates in March to near-zero level as a move to protect the economy from the impacts of coronavirus outbreak is likely to have hurt U.S. Bancorp’s net interest margin, thereby impacting NII.
The Zacks Consensus Estimate for average interest earning assets of $467.8 billion for the quarter indicates a 9.6% improvement from the year-ago reported quarter.
Overall, the consensus estimate of $3.18 billion for NII suggests a 3.8% year-over-year fall.
Mortgage Banking Fees Higher: Pickup in refinancing activities on the back of historically low mortgage rates during the quarter is likely to have offered support to the company. The Zacks Consensus Estimate for mortgage banking revenues is pegged at $413 billion, suggesting a significant increase from the year-ago reported number.
Non-Interest Revenues to Fall: Deposits have shown improvement in the quarter, which is likely to have resulted in higher revenues from service charges on deposits. In addition, trust income is likely to have supported the company on strong markets.
However, card fees might have been hurt on lower consumer spending due to the shutdowns. Further, the consensus estimate for treasury management fees of $145 million indicates a 5.2% decline from the prior-year quarter’s reported number.
Overall, the Zacks Consensus Estimate for non-interest revenues is pegged at $2.28 billion, suggesting an 8.4% fall from the year-ago period’s reported number.
Expenses Might Increase: While the absence of considerable legal expenses is encouraging, increased investments in technology to improve digital offerings might have moderately escalated costs in the quarter under discussion.
Here is what our quantitative model predicts:
U.S. Bancorp has the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP for U.S. Bancorp is +16.59%.
Zacks Rank: U.S. Bancorp currently carries a Zacks Rank of 3.
The Zacks Consensus Estimate for its earnings of 89 cents indicates a 64.2% fall on a year-over-year basis.
Other Stocks That Warrant a Look
Here are a few other stocks you may want to consider, as according to our model these too have the right combination of elements to post an earnings beat this quarter.
BancorpSouth Bank BXS is scheduled to release quarterly results on Jul 20. The company currently has an Earnings ESP of +1.09% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bank of Hawaii Corp. BOH is scheduled to release results on Jul 27. The company has an Earnings ESP of +0.76% and a Zacks Rank of 3 at present.
BNY Mellon BK is slated to report quarterly earnings on Jul 15. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +0.46%.
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Click to get this free report U.S. Bancorp (USB) : Free Stock Analysis Report The Bank of New York Mellon Corporation (BK) : Free Stock Analysis Report BancorpSouth Bank (BXS) : Free Stock Analysis Report Bank of Hawaii Corporation (BOH) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research