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The PNC Financial Services Group, Inc (PNC) Up 7% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for The PNC Financial Services Group, Inc (PNC - Free Report) . Shares have added about 7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is The PNC Financial Services Group, Inc 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 catalysts.
PNC Financial Down on Q4 Earnings Miss, Costs Dip Y/Y
The PNC Financial Services Group, Inc.’s fourth-quarter 2022 adjusted earnings of $3.49 per share lagged the Zacks Consensus Estimate of $3.95. Also, the bottom line declined 5.2% year over year.
Results were primarily hurt by a decline in non-interest income and higher provisions. However, an increase in net interest income, supported by higher rates and loan growth, and a decline in expenses were tailwinds.
Net income was $1.55 billion, higher than $1.31 billion in the prior-year quarter.
For 2022, adjusted earnings were $13.96 per share, which missed the Zacks Consensus Estimate of $14.35. Also, the bottom line declined 1.6% year over year. Net income was $6.11 billion, higher than $5.73 billion in the prior-year period.
Revenues Improve, Expenses Decline
Total quarterly revenues were $5.76 billion, up 12.4% year over year. The top line beat the Zacks Consensus Estimate of $5.69 billion.
For 2022, revenues were $21.12 billion, up 9.9% year over year. The top line beat the Zacks Consensus Estimate of $21.06 billion.
Quarterly net interest income was $3.68 billion, which improved 28.7% from the year-ago quarter. The upswing is attributable to higher interest-earning asset yields and balances, partially offset by higher funding costs. The net interest margin increased 65 basis points to 2.92%.
Non-interest income fell 8.2% year over year to $2.08 billion. The decline was due to a fall in almost all fee income components, except for card and cash management fees, and lending and deposit services fees.
Non-interest expenses totaled $3.47 billion, declining 8.4% from the year-ago figure. All cost components declined, except for marketing costs.
The efficiency ratio was 60% compared with 74% in the year-ago quarter. A lower efficiency ratio indicates higher profitability.
As of Dec 31, 2022, total loans were $326.03 billion, which grew 3.4% sequentially. However, total deposits decreased marginally from the end of the previous quarter to $436.28 billion.
Credit Quality: A Mixed Bag
The company reported provision for credit losses of $408 million in the fourth quarter against the recapture of credit losses of $327 million in the year-earlier quarter. Net loan charge-offs were $224 million, up 80.6% year over year.
Nonetheless, non-performing loans decreased 20% year over year to $1.99 billion. Also, the allowance for credit losses declined 1.7% to $5.44 billion.
Capital Position Weakens, Profitability Ratios Improve
As of Dec 31, 2022, the Basel III common equity tier 1 capital ratio was 9.1% compared with 10.3% as of Dec 31, 2021.
Return on average assets and average common shareholders’ equity were 1.10% and 14.19%, respectively, compared with 0.93% and 9.61% witnessed in the prior-year quarter.
Capital Deployment Activity
In the fourth quarter of 2022, PNC Financial returned $1.2 billion of capital to shareholders through dividends on common shares of $0.6 billion and share repurchases amounting to $0.6 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -5.25% due to these changes.
VGM Scores
At this time, The PNC Financial Services Group, Inc has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, The PNC Financial Services Group, Inc has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
The PNC Financial Services Group, Inc belongs to the Zacks Banks - Major Regional industry. Another stock from the same industry, Wells Fargo (WFC - Free Report) , has gained 9.9% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.
Wells Fargo reported revenues of $19.66 billion in the last reported quarter, representing a year-over-year change of -5.7%. EPS of $0.67 for the same period compares with $1.38 a year ago.
Wells Fargo is expected to post earnings of $1.19 per share for the current quarter, representing a year-over-year change of +35.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.1%.
Wells Fargo has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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The PNC Financial Services Group, Inc (PNC) Up 7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for The PNC Financial Services Group, Inc (PNC - Free Report) . Shares have added about 7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is The PNC Financial Services Group, Inc 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 catalysts.
PNC Financial Down on Q4 Earnings Miss, Costs Dip Y/Y
The PNC Financial Services Group, Inc.’s fourth-quarter 2022 adjusted earnings of $3.49 per share lagged the Zacks Consensus Estimate of $3.95. Also, the bottom line declined 5.2% year over year.
Results were primarily hurt by a decline in non-interest income and higher provisions. However, an increase in net interest income, supported by higher rates and loan growth, and a decline in expenses were tailwinds.
Net income was $1.55 billion, higher than $1.31 billion in the prior-year quarter.
For 2022, adjusted earnings were $13.96 per share, which missed the Zacks Consensus Estimate of $14.35. Also, the bottom line declined 1.6% year over year. Net income was $6.11 billion, higher than $5.73 billion in the prior-year period.
Revenues Improve, Expenses Decline
Total quarterly revenues were $5.76 billion, up 12.4% year over year. The top line beat the Zacks Consensus Estimate of $5.69 billion.
For 2022, revenues were $21.12 billion, up 9.9% year over year. The top line beat the Zacks Consensus Estimate of $21.06 billion.
Quarterly net interest income was $3.68 billion, which improved 28.7% from the year-ago quarter. The upswing is attributable to higher interest-earning asset yields and balances, partially offset by higher funding costs. The net interest margin increased 65 basis points to 2.92%.
Non-interest income fell 8.2% year over year to $2.08 billion. The decline was due to a fall in almost all fee income components, except for card and cash management fees, and lending and deposit services fees.
Non-interest expenses totaled $3.47 billion, declining 8.4% from the year-ago figure. All cost components declined, except for marketing costs.
The efficiency ratio was 60% compared with 74% in the year-ago quarter. A lower efficiency ratio indicates higher profitability.
As of Dec 31, 2022, total loans were $326.03 billion, which grew 3.4% sequentially. However, total deposits decreased marginally from the end of the previous quarter to $436.28 billion.
Credit Quality: A Mixed Bag
The company reported provision for credit losses of $408 million in the fourth quarter against the recapture of credit losses of $327 million in the year-earlier quarter. Net loan charge-offs were $224 million, up 80.6% year over year.
Nonetheless, non-performing loans decreased 20% year over year to $1.99 billion. Also, the allowance for credit losses declined 1.7% to $5.44 billion.
Capital Position Weakens, Profitability Ratios Improve
As of Dec 31, 2022, the Basel III common equity tier 1 capital ratio was 9.1% compared with 10.3% as of Dec 31, 2021.
Return on average assets and average common shareholders’ equity were 1.10% and 14.19%, respectively, compared with 0.93% and 9.61% witnessed in the prior-year quarter.
Capital Deployment Activity
In the fourth quarter of 2022, PNC Financial returned $1.2 billion of capital to shareholders through dividends on common shares of $0.6 billion and share repurchases amounting to $0.6 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -5.25% due to these changes.
VGM Scores
At this time, The PNC Financial Services Group, Inc has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, The PNC Financial Services Group, Inc has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
The PNC Financial Services Group, Inc belongs to the Zacks Banks - Major Regional industry. Another stock from the same industry, Wells Fargo (WFC - Free Report) , has gained 9.9% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.
Wells Fargo reported revenues of $19.66 billion in the last reported quarter, representing a year-over-year change of -5.7%. EPS of $0.67 for the same period compares with $1.38 a year ago.
Wells Fargo is expected to post earnings of $1.19 per share for the current quarter, representing a year-over-year change of +35.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.1%.
Wells Fargo has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.