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PNC Q2 Preview: 8th Consecutive EPS Beat on Its Way?

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Earnings season is quickly approaching. The fun kicks off as early as this week for a handful of companies.  

2022 Q1 was undoubtedly a tough time to be an investor. Many, if not all companies, had their quarterly results negatively impacted by supply chain disruptions and, of course, skyrocketing costs.

The second round of quarterly earnings will undoubtedly be a crucial gauge of companies’ financial health. Investors are eager to see how they have performed amid a challenging macroeconomic backdrop.

One company slated to release quarterly earnings this week is The PNC Financial Services Group (PNC - Free Report) . Headquartered in the steel city of Pittsburgh, PNC provides consumer and business banking services.

PNC is currently a Zacks Rank #3 (Hold) with an overall VGM Score of a C. Additionally, the company resides within the Zacks Finance Sector.

Let’s see how the company shapes up heading into the quarterly report; PNC reports before the opening bell on Friday.

Share Performance & Valuation

Year-to-date, PNC shares have struggled quite noticeably, declining more than 20% in value and underperforming the general market by a fair margin.

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Image Source: Zacks Investment Research

Upon expanding the time zone to encompass a year’s worth of price action, the story primarily remains the same – PNC shares have been caught up in a rough stretch, declining approximately 16% in value and underperforming the S&P 500 in this timeframe as well.

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Image Source: Zacks Investment Research

PNC sports an enticing 11.0X forward earnings multiple, nowhere near highs of 35.9X in 2020 and well below its five-year median value of 13.7X. Additionally, shares trade at an attractive 21% discount relative to its Zacks Sector.

PNC has a Style Score of a C for Value.

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Image Source: Zacks Investment Research

Quarterly Performance & Share Reactions

PNC has consistently reported strong bottom-line results, exceeding EPS estimates in 18 of its last 20 quarterly reports. In its latest quarter, the company handily beat the Zacks Consensus EPS Estimate of $2.78 by a double-digit 18% and reported quarterly EPS of $3.29.

Top-line results have displayed strength as well. Out of its last ten quarters, PNC has exceeded quarterly revenue estimates eight times.

The market has generally reacted poorly to bottom-line beats – out of PNC’s seven previous EPS beats, shares have moved upwards just twice.

Growth Estimates

For the quarter to be reported, the Zacks Consensus EPS Estimate resides at $3.13, registering a disheartening 30% decrease in earnings from the year-ago quarter. Over the last 60 days, the Consensus Estimate Trend has decreased almost 2%, with four of the seven estimate revisions being downwards.

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Image Source: Zacks Investment Research

However, the top-line displays some strength; PNC is forecasted to generate $5.1 billion in quarterly revenue, good enough for a 9% growth in quarterly sales year-over-year. The chart below illustrates PNC's revenue on a quarterly basis.

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Image Source: Zacks Investment Research

Bottom Line

Heading into the quarterly report, PNC currently has an Earnings ESP Score of -1.4%. The quarterly report will undoubtedly be watched like a hawk – PNC is one of the initial companies kicking off the earnings season.

PNC shares have struggled noticeably over the last year, quarterly estimates have fallen, and the company is forecasted to register a double-digit decline in quarterly earnings year-over-year. Additionally, the market has primarily reacted poorly to bottom-line beats.

In this situation, a defensive approach could be beneficial.

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