Monday, December 17, 2007
* Stock Analysis: USB
Linked here is a PDF copy of my detailed analysis of U.S. Bancorp (USB) (alt.1, alt.2). Below are some highlights from the above linked analysis:
Company Description: U.S. Bancorp operates as the holding company for U.S. Bank that provides commercial banking and financial services in the United States.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description: 1.) Avg. High Yield Price, 2.) 20-Year DCF Price, 3.) Avg. P/E Price and 4.) Graham Number. USB is trading at a discount to two of the four valuations listed above. If I exclude the high and low valuation, and average the remaining two valuations, USB is trading at a 1.6% discount. USB gets a Star for being fairly valued.
Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description: 1.) Rolling 4-yr Div. > 15%, 2.) Dividend Growth Rate, 3.) Years of Div. Growth, 4.) 1-Yr. > 5-Yr Growth and 5.) Payout 15% of avg. USB only earned one Star in this section for 3.) above - it has grown dividends for 10+ years.
Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description: 1.) NPV MMA Diff. and 2.) Years to >MMA. USB earned Stars for both 1.) and 2.) above.
Other: USB is a member of the S&P 500 Dividend Aristocrats and the Broad Dividend Achievers™ Index. From a recent S&P analysis: "USB remains one of the most profitable large cap banks in our coverage universe, in terms of returns on equity and assets, which highlights the company's focus on revenue growth and cost controls, and what we see as its attractive mix of high margin fee businesses. We believe that the company's diversified revenue model of economically sensitive businesses, combined with our projection of accelerating growth in commercial lending and USB's strong focus on expense management, will generate above industry average profitability."
Conclusion: USB earned one Star in the Fair Value section, one Star in the Dividend Analytical Data section and two Stars in the Dividend Income vs. MMA section for a total of Four Stars which rates it as a 4-Star Buy.
Disclaimer: As always this is only my opinion and you should not rely on it. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.
Full Disclosure: At the time of this writing, I own shares of USB.
What are your thoughts on USB?
Recent Stock Analyses:
Popular Posts - Last 7 days
Presented below are my dividend stock and ETF/CEF holdings. This is not a recommendation to buy these securities. I have classified some of...
Every investor wants to earn more. It is how we define "more" and how we go about earning it that defines the type of investor we ...
In every field there are winners and there are champions. The difference is subtle, but very real. A champion is driven for success and will...
In 1993, State Street Global Advisors launched the first exchange-traded fund (ETF). Now there are literally hundreds of ETFs out there cove...
Monday, October 31, 2011 will mark my fourth full year of writing as Dividends4Life . It is hard to believe another year has passed. Like th...
Each Sunday I highlight any notable articles that I came across over the past week, along with any Carnivals I participated in. For those re...
In the U.S. and Canada, most companies pay dividends quarterly . In other parts of the world, it is not uncommon for companies to pay an ann...
Linked here is a detailed quantitative analysis of 3M Company (MMM). Below are some highlights from the above linked analysis: Company De...
Like many that came before me, I am on a journey to construct a portfolio that will provide me... Dividends 4 Life
Linked here is a detailed quantitative analysis of Verizon Communications Inc. (VZ). Below are some highlights from the above linked analys...