Is U.S. Bancorp a Good Momentum Stock?

Momentum investing is centered around tracking a stock's recent performance trends, regardless of whether they are upward or downward. In a positive market strategy, investors tend to "buy high" with the expectation that they can later "sell even higher." Therefore, capitalizing on trends in a stock's price is crucial for momentum investors. Once a stock sets a particular trajectory, it is likely to continue in that direction, making this methodology appealing for generating timely and profitable trades.

Defining momentum can be challenging, given the ongoing debates about the best metrics to utilize. The Zacks Momentum Style Score, part of a larger ranking system, offers some clarity in this area.

Taking a closer look at U.S. Bancorp (NYSE:USB), the company currently enjoys a Momentum Style Score of B. Key components of this score include price changes and revisions in earnings estimates.

It's worth mentioning that Style Scores are meant to complement the Zacks Rank, a stock rating framework known for its strong historical performance. U.S. Bancorp holds a Zacks Rank of #2 (Buy). Research indicates that stocks rated with Zacks Rank #1 (Strong Buy) and #2 (Buy) with Style Scores of A or B typically outperform the broader market in the following month.

Is U.S. Bancorp Poised to Outperform the Market?

To evaluate whether USB is a strong momentum candidate, we should analyze its recent performance metrics.

Reviewing a stock's short-term price behavior is valuable for assessing momentum; this data often reflects current market interest and the balance of buyer versus seller activity. Comparing a stock’s performance with its industry peers can also highlight leading companies within a sector.

For U.S. Bancorp, shares have increased by 0.21% over the last week, while the Zacks Banks - Major Regional industry has seen a slight uptick of 0.33%. In a more extended view, the stock has delivered a monthly price change of 6.12%, outpacing the industry’s 4.51% gain.

While a stock might experience occasional price spikes, true success is reflected in sustained outperformance. Over the past quarter, U.S. Bancorp’s shares climbed 13.79%, and over the last year, they surged by 33.8%. In contrast, the S&P 500 Index has seen increases of 7.29% and 32.85%, respectively.

Investors should also monitor U.S. Bancorp’s average trading volume over the past 20 days. Trading volume is a critical indicator; a stock with rising prices and higher than average volume generally signals bullish activity, whereas a declining stock with increased volume suggests bearish conditions. Currently, USB averages approximately 8,694,755 shares traded over the last 20 days.

Earnings Outlook for U.S. Bancorp

The Zacks Momentum Style Score incorporates earnings estimate trends in addition to price changes. These estimate revisions are fundamental components of the Zacks Rank system, and favorable trends can indicate potential future gains. Recently, U.S. Bancorp has demonstrated positive upward trends.

In the last two months, six earnings estimates for the full year have been raised, compared to just one downward revision. As a result, USB's consensus estimate rose from $3.86 to $3.92 in the past 60 days. Looking ahead to the next fiscal year, there have been eight upward revisions and one downward adjustment in the same timeframe.

Conclusion

Given these insights, it is clear why U.S. Bancorp holds a Zacks Rank of #2 (Buy) and has a Momentum Score of B. If you're on the lookout for a promising stock poised for growth in the near term, consider adding U.S. Bancorp to your watchlist.

investing, momentum, stocks