U.S. Bancorp (USB) To Report Q3 Earnings: What's In Store?

U.S. Bancorp (NYSE:USB) is scheduled to report third-quarter 2017 results on Oct 18, before the opening bell. The bank’s revenues and earnings are anticipated to be up year over year.

Why a Likely Positive Surprise?

Our proven model shows that U.S. Bancorp is likely to beat on earnings in the third quarter. This is because the company has the combination of the two key ingredients for a possible earnings beat — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold).

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: The Earnings ESP for the stock is currently pegged at +0.26%. This is a very significant and leading indicator of a likely positive earnings surprise for the company.

Zacks Rank: The combination of U.S. Bancorp’s Zacks Rank #3 and a positive ESP makes us confident of an earnings beat.

Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement.

Notably, U.S. Bancorp delivered positive earnings surprises in three of the four trailing quarters, with an average beat of 1.23% as depicted in the chart below:

U.S. Bancorp Price and EPS Surprise

U.S. Bancorp Price and EPS Surprise | U.S. Bancorp Quote

Regarding the stock’s performance, shares of the company gained around 3.2% for the three-month period ended Sep 30, 2017, underperforming growth of 3.9% recorded by the industry.

Factors to Influence Q3 Results

Expenses Might Trend Higher: While the absence of considerable legal expenses is a positive, increased investments in technology to improve digital offerings might escalate costs moderately.

Slight rise in net interest income (NII) on modest loan growth: Improvement in loan demand, particularly commercial and industrial, and consumer loans during the to-be-reported quarter will likely support the company’s NII.

Consumer Revenue Growth: It is anticipated that an improving economy will spur consumer activity, which will help both payments businesses and consumer lending businesses. An improved economic backdrop will also lead to a rise in business spending on development and capital investments.

Mortgage Banking Likely to Improve: Higher mortgage banking is projected on stronger origination volumes. Expectations of a higher rate environment might have encouraged refinancing activities during the quarter under review. Nevertheless, with the refinance boom nearing its end, no major help is expected from this segment. So, the contribution of mortgage revenues to total revenues will not be much. The Zacks Consensus Estimate for mortgage banking revenue is $215 billion, relatively stable year over year.

Activities of U.S. Bancorp during the quarter to be reported were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter remained unchanged at 88 cents over the last seven days. Also, the Zacks Consensus Estimate for sales is projected at $5.6 billion, up 4.9% year over year.

Stocks That Warrant a Look

Here are some other stocks you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.

T. Rowe Price Group, Inc. (NASDAQ:TROW) is slated to release results on Oct 26. The company has an Earnings ESP of +3.25% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Franklin Resources, Inc. (NYSE:BEN) is +0.56% and it also carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Oct 26.

State Street Corporation (NYSE:STT) has an Earnings ESP of +0.27% and holds a Zacks Rank of 2. It is scheduled to report results on Oct 23.

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