U.S. BancorpUSBNYSE

Overview Intelligence Charts News Fundamentals DCF Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Sell

Fair Value: $48.52 per share(market-calibrated)

-16.6%

Upside to Fair Value

Current

$58.17

Pure Model

$47.89

Fair Value

$48.52

Bull Case

$48.67

Bear Case

$45.44

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

3.97%

Calibrated Growth

2.72%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $47.89.

What's Driving This Ratingfor USB

✓

CapEx already efficient

CapEx at 0.00% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 25.43% — below the sector mature average of 28.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $10.9B (27.46% margin).

→

Moderate revenue growth

Analyst consensus projects -29.22% revenue growth, fading to 2.50% by Year 10. Revenue reaches $39.8B (vs $42.9B today).

🎯

Market pricing in higher long-term growth

To justify $58.17, the market implies 3.97% perpetual growth — 147bps above the model's 2.50%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 79.95% indicates efficient cash generation. FCF reaches $9.2B by Year 10 (23.08% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.06

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.26%

Cost of Debt

Pre-tax Cost of Debt11.94%

Tax Rate20.18%

After-tax Cost of Debt9.53%

Equity Weight (E/V)53.72%

Debt Weight (D/V)46.28%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (53.72% × 9.26%) + (46.28% × 9.53%)

= 9.38%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$30.3B	$33.2B	$35.1B	$36.9B	$39.8B
EBIT	$7.7B	$8.4B	$9.3B	$9.9B	$10.9B
Tax	$1.6B	$1.7B	$1.9B	$2.0B	$2.2B
NOPAT	$6.2B	$6.7B	$7.4B	$7.9B	$8.7B
+ Depreciation	$427M	$467M	$494M	$519M	$559M
- Capex	--	--	--	--	--
- Δ NWC	-$1.3B	$125M	$86M	$90M	$97M
Free Cash Flow	$7.8B	$7.1B	$7.8B	$8.4B	$9.2B
Discount Factor	0.914	0.764	0.639	0.534	0.408
Present Value	$7.2B	$5.4B	$5.0B	$4.5B	$3.7B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$9.2B

Terminal Growth Rate2.50%

WACC9.38%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$136.6B

PV of Terminal Value$55.7B

Exit Multiple Method

Year 10 EBITDA$11.5B

Exit Multiple (EV/EBITDA)12.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$137.7B

PV of Terminal Value$56.2B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$49.6B

PV of Terminal Value$55.7B

Enterprise Value$105.3B

(-) Net Debt$31.0B

Equity Value$74.3B

Shares Outstanding$1.6B

Price per Share$47.75

Exit Multiple Method

PV of Projected FCFs$49.6B

PV of Terminal Value$56.2B

Enterprise Value$105.7B

(-) Net Debt$31.0B

Equity Value$74.7B

Shares Outstanding$1.6B

Price per Share$48.03

Pure Model Fair Value

$47.89

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
7.38%	$61.85	$66.75	$72.67	$79.93	$89.06
8.38%	$50.81	$54.07	$57.87	$62.39	$67.83
9.38%	$42.90	$45.16	$47.75	$50.75	$54.25
10.38%	$37.02	$38.65	$40.48	$42.57	$44.95
11.38%	$32.53	$33.74	$35.08	$36.58	$38.27

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$45.44

-21.9% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.32

Base Case

$47.89

-17.7% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 1.06

Bull Case

$48.67

-16.3% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.90

Key Assumptions & Drivers• Financial Services Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-29.22%

Year 3 Revenue Growth3.91%

Year 5 Revenue Growth2.50%

Year 7 Revenue Growth2.50%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin25.43%

Terminal EBIT Margin28.00%

Tax Rate20.18%

Historical Capex / Rev0.00%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (S&P 500: 22x P/E)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

Explore More

S&P 500 Screener

Filter and sort all 500 stocks

Market Movers

Today's biggest gainers and losers

Market Heatmap

Visual sector performance