U.S. Bancorp shares may stabilize above $50 after the board adopted a $3B stock buyback plan

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Jan 2, 2021
Updated: Jan 12, 2021
  • U.S. Bancorp's board has adopted a $3B stock buyback plan
  • Shares of this bank remain attractive for long-term oriented investors
  • Even with the COVID-19 pandemic, the business of this bank is going well

U.S. Bancorp (NYSE: USB) shares have advanced from $38 above $47 since the beginning of November, and the current price stands around $46.5. U.S. Bancorp’s board has approved the repurchase of up to $3B of the company’s outstanding common stock and the technical picture implies that the price may stabilize above $50 this January.

Fundamental analysis: Shares of this bank remain attractive for long-term oriented investors

U.S. Bancorp is an American bank holding company that provides banking, investment, mortgage, trust, and payment services products. According to analysts, banking stocks could rise at the beginning of the 2021 year as the Federal Reserve announced that it would allow share buybacks starting from January.

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The biggest U.S. banks with enough capital to withstand losses would be permitted to pay out dividends and buy back stock on a limited basis. Following this Fed’s move, U.S. Bancorp’s board has approved the repurchase of up to $3B of the company’s outstanding common stock.

U.S. Bancorp is a stable bank with a good position in the market, and even with the COVID-19 pandemic, the business of this bank is going well.

U.S. Bancorp has reported Q3 results in October; total revenue has increased by 0.7% Y/Y to $5.96B while Q3 GAAP EPS was $0.99 (beats by $0.10). Total revenue has risen above the expectations (beats by $260M), and the bank has declared $0.42/share quarterly dividend which is in line with previous.

“Our mortgage banking business was particularly strong in the third quarter as we continued to support customers’ home financing and re-financing needs, and our payments businesses benefited from improving consumer spending activity as state and local economies continued to open,” said Andy Cecere, President & CEO.

The current dividend yield is around 3.6%, and shares of this bank remain attractive for long-term oriented investors. Essential information for potential investors is the fact that Berkshire Hathaway has U.S. Bancorp shares in its portfolio.

U.S. Bancorp shares are attractively valued currently, and the technical picture implies that the price may stabilize above $50 this January.

Technical Analysis: The technical picture implies that the price may stabilize above $50 this January

Data source: tradingview.com

When we look at the chart above ( one year period), we can see that this stock price has weakened from $59 to $28 and then started to rise. On this chart, I marked significant resistance and support levels.

The critical support levels are $45 and $40; $50 and $55 represent the resistance levels. If the price jumps above $50, it would be a buy signal, and the next target could be around $55. If the price falls in the upcoming period, every price in a range from $30 – $40 could be a very good opportunity to invest in shares.

Summary

U.S. Bancorp is a stable bank with a good position in the market, and shares of this bank remain attractive for long-term oriented investors. The Federal Reserve announced that it would allow share buybacks starting from January, and U.S. Bancorp’s board has approved the repurchase of up to $3B of the company’s outstanding common stock.

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