We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is PNC Financial (PNC) Up 4.3% Since the Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for PNC Financial Services Group, Inc. (The) (PNC - Free Report) . Shares have added about 4.3% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
PNC Financial Beats on Q1 Earnings, Costs Increase
Riding on high revenues, PNC Financial recorded a positive earnings surprise of 6.5% in first-quarter 2017. Earnings per share of $1.96 significantly beat the Zacks Consensus Estimate of $1.84. Moreover, the bottom line increased 16.7% year over year. Earnings for the reported quarter include the effect of deferred issuance costs of $0.04 per share.
Continued growth in loans and deposits helped the company earn higher revenues during the quarter. However, this was partially offset by an increase in expenses.
The company reported net income of $1.07 billion in the reported quarter, up 14% year over year.
Segment wise, on a year-over-year basis, the quarterly net income in Corporate & Institutional Banking and Other, including BlackRock, improved 22% and 30%, respectively.
However, net income in Retail Banking and Asset Management segments plunged 12% and 4%, respectively.
Increased Revenues More than Offset Higher Expenses
Total revenue for the quarter came in at $3.88 billion, rising 6% year over year. The reported figure surpassed the Zacks Consensus Estimate of $3.77 billion.
Net interest income was up 3% year over year to $2.16 billion due to higher loan and securities balances. Also, net interest margin increased 2 basis points year over year to 2.77%.
Non-interest income was up 10% year over year to $1.72 billion, driven by higher corporate services, asset management and residential mortgage.
PNC Financial’s non-interest expenses were $2.40 billion, up 5% from the year-ago quarter. The quarter witnessed rise in marketing, personal and equipment-related expenses.
As of Mar 31, 2017, total loans were up 3% to $212.8 billion, supported by commercial lending. Also, total deposits grew 4% year over year to $260.7 billion.
Credit Quality Improves
PNC Financial’s credit quality reflected significant improvement in the quarter.
Non-performing assets declined 13% year over year to $2.21 billion. Moreover, the allowance for loan and lease losses fell 6% year over year to $2.56 billion.
Net charge-offs declined 21% year over year to $118 million. Further, provision for credit losses was $88 million, down 42% from $152 million in the prior-year quarter.
Capital Ratios Decline
As of Mar 31, 2017, the transitional Basel III common equity Tier 1 capital ratio was 10.5%, down one basis point year over year. Tier 1 risk-based capital ratio and leverage ratio were 11.8% and 9.9%, respectively, compared with 11.9% and 10.2% at the prior-year quarter end.
Share Repurchase
In first-quarter 2017, PNC Financial repurchased 5.0 million common shares for $0.6 billion.
Outlook
Second-Quarter 2017
The company expects the loan growth to be modest sequentially.
The increase in NII is expected to be in low-single digits while fee income is expected to grow by mid-single digits.
Management anticipates non-interest expenses to rise in low-single digits on a sequential basis.
Provisions for loan loss are expected to be in the range of $75–$125 million. The company believes that the second quarter provision will include an initial allowance and reserve for the ECN acquisition, which can result in total provision being at the higher end of this range.
2017
Management anticipates growth in revenues to be in mid-single digits. Further, operating expenses are predicted to rise at low-single digit rates. Moreover, loans are anticipated to grow in mid-single digits.
The effective tax rate is expected to be approximately 25% to 26%, excluding any tax reform.
Quarterly other noninterest income is anticipated to be between $250 million to $275 million, excluding debt securities gains and net Visa activity.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter compared to one lower. While looking back an additional 30 days, we can see even more upward momentum.
PNC Financial Services Group, Inc. (The) Price and Consensus
At this time, PNC Financial's stock has a subpar Growth Score of 'D', however its Momentum is doing a bit better with a 'C'. Following the exact same course, the stock was allocated also a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is PNC Financial (PNC) Up 4.3% Since the Last Earnings Report?
A month has gone by since the last earnings report for PNC Financial Services Group, Inc. (The) (PNC - Free Report) . Shares have added about 4.3% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
PNC Financial Beats on Q1 Earnings, Costs Increase
Riding on high revenues, PNC Financial recorded a positive earnings surprise of 6.5% in first-quarter 2017. Earnings per share of $1.96 significantly beat the Zacks Consensus Estimate of $1.84. Moreover, the bottom line increased 16.7% year over year. Earnings for the reported quarter include the effect of deferred issuance costs of $0.04 per share.
Continued growth in loans and deposits helped the company earn higher revenues during the quarter. However, this was partially offset by an increase in expenses.
The company reported net income of $1.07 billion in the reported quarter, up 14% year over year.
Segment wise, on a year-over-year basis, the quarterly net income in Corporate & Institutional Banking and Other, including BlackRock, improved 22% and 30%, respectively.
However, net income in Retail Banking and Asset Management segments plunged 12% and 4%, respectively.
Increased Revenues More than Offset Higher Expenses
Total revenue for the quarter came in at $3.88 billion, rising 6% year over year. The reported figure surpassed the Zacks Consensus Estimate of $3.77 billion.
Net interest income was up 3% year over year to $2.16 billion due to higher loan and securities balances. Also, net interest margin increased 2 basis points year over year to 2.77%.
Non-interest income was up 10% year over year to $1.72 billion, driven by higher corporate services, asset management and residential mortgage.
PNC Financial’s non-interest expenses were $2.40 billion, up 5% from the year-ago quarter. The quarter witnessed rise in marketing, personal and equipment-related expenses.
As of Mar 31, 2017, total loans were up 3% to $212.8 billion, supported by commercial lending. Also, total deposits grew 4% year over year to $260.7 billion.
Credit Quality Improves
PNC Financial’s credit quality reflected significant improvement in the quarter.
Non-performing assets declined 13% year over year to $2.21 billion. Moreover, the allowance for loan and lease losses fell 6% year over year to $2.56 billion.
Net charge-offs declined 21% year over year to $118 million. Further, provision for credit losses was $88 million, down 42% from $152 million in the prior-year quarter.
Capital Ratios Decline
As of Mar 31, 2017, the transitional Basel III common equity Tier 1 capital ratio was 10.5%, down one basis point year over year. Tier 1 risk-based capital ratio and leverage ratio were 11.8% and 9.9%, respectively, compared with 11.9% and 10.2% at the prior-year quarter end.
Share Repurchase
In first-quarter 2017, PNC Financial repurchased 5.0 million common shares for $0.6 billion.
Outlook
Second-Quarter 2017
The company expects the loan growth to be modest sequentially.
The increase in NII is expected to be in low-single digits while fee income is expected to grow by mid-single digits.
Management anticipates non-interest expenses to rise in low-single digits on a sequential basis.
Provisions for loan loss are expected to be in the range of $75–$125 million. The company believes that the second quarter provision will include an initial allowance and reserve for the ECN acquisition, which can result in total provision being at the higher end of this range.
2017
Management anticipates growth in revenues to be in mid-single digits. Further, operating expenses are predicted to rise at low-single digit rates. Moreover, loans are anticipated to grow in mid-single digits.
The effective tax rate is expected to be approximately 25% to 26%, excluding any tax reform.
Quarterly other noninterest income is anticipated to be between $250 million to $275 million, excluding debt securities gains and net Visa activity.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter compared to one lower. While looking back an additional 30 days, we can see even more upward momentum.
PNC Financial Services Group, Inc. (The) Price and Consensus
PNC Financial Services Group, Inc. (The) Price and Consensus | PNC Financial Services Group, Inc. (The) Quote
VGM Scores
At this time, PNC Financial's stock has a subpar Growth Score of 'D', however its Momentum is doing a bit better with a 'C'. Following the exact same course, the stock was allocated also a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.