U.S. Bancorp is scored 49 for moat and 64 for management. The management score rests on a return on invested capital of 4.5% and a gross margin of 62.8% — figures that describe a business earning a respectable return on what it employs. Debt sits at 1.20x equity. The moderate moat and strong management are not the same judgement, and the gap between them is where the argument about this business sits.
Three independent anchors set the price worth paying. Growth is modelled at 11.2% a year, the rate measured from the filings. The exit multiple assumed is 13.2x. That produces an intrinsic value of $47.17, a 10-CAP price of $79.64 and a payback time price of $105.65, with the value zone set at the highest of the three, $105.65. Today's price of $57.36 sits inside that zone.
The price sits inside the value zone, but the business scores 49 for moat and 64 for management. Cheap and good are different tests, and only one of them is passed here.
| Price | $57.36 |
| Market cap | $89.4B |
| P/E ratio | 11.5x |
| Return on invested capital | 4.5% |
| Gross margin | 62.8% |
| Debt to equity | 1.20x |
| Free cash flow yield | 9.6% |
| Growth rate used | 11.2% |
| Growth rate measured | 11.0% |
| Exit multiple assumed | 13.2x |
| Company | Moat | Buy price |
| Can Imperial Bk Of Commerce (CM) | 60 | $224.14 |
| Bank Of Nova Scotia (BNS) | 30 | $82.74 |
| Credicorp Ltd (BAP) | 64 | $236.87 |
| Ubs Group Ag-Reg (UBS) | 68 | $26.98 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of U.S. Bancorp rather than accepting ours.