U.S. Bancorp posted record revenue with strong fees and margin gains. At $57.39, buyback pause fears leave 14% upside to $65.57.
Key points
- $8.0 billion of record quarterly revenue grew 8.7% from last year on fees and loans.
- 18.5% return on tangible equity in Q3 FY26 shows strong profit on each dollar invested.
- $65.57 a share target values $5.70 of 2027 profit at 11.5 times for 14% upside.
The call
The market treats this as a bank stuck on pause. At $57.39 the shares trade near 10 times next year profit, which assumes fee growth fades and margins stall. That view made sense when buybacks stopped and bond losses hurt capital.
Quarterly revenue is hitting records ($ billions)Company filings and Oct 15 2026 release; Q4 FY26E is author's estimate.
I see a fee led grower with room to expand. I expect $5.70 of 2027 profit per share as fixed loans reset higher and deposits stay loyal. That profit path supports a 3% margin, a measure of loan profit, and lets share buybacks, purchases of its own shares, restart.
Valuation
| 2026 profit per share | $5.23 a share |
| 2027 profit per share | $5.70 a share |
| Fair multiple | 11.5 times |
| 12-month target | $65.57 a share |
Profit per share keeps climbing ($ per share)Company releases; Q4 FY26E is author's estimate.
Peers trade near 11 to 12 times next year profit. I use 11.5 times for 18.5% tangible returns in 2026. Upside plus a 3.8% dividend yield in the next 12 months supports a buy.
Risks
- Deposit rivalry forces higher payouts and margin stalls, seen in monthly deposit costs and a beta above 50% in Q4 FY26.
- Property loan losses jump as high rates bite, seen in nonperforming assets and charge-offs above 0.60% in next two quarters.
- BTIG deal costs linger and fee growth slows, seen in quarterly capital markets revenue under $200 million in Q4 FY26.
What would change my mind
Loan growth stalls while deposit costs keep rising and buybacks stay paused past mid 2027.