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PNC Financial (PNC) to Post Q1 Earnings: What's in Store?
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PNC Financial Services Group, Inc. (PNC - Free Report) is scheduled to report its first-quarter 2023 earnings before the opening bell on Apr 14. The company’s earnings and revenues are expected to have witnessed year-over-year improvement.
In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate on a decline in non-interest income and higher provisions. Yet, an increase in net interest income (NII), supported by higher rates and loan growth, and a decline in expenses were tailwinds.
Notably, PNC Financial has an impressive earnings surprise history. It surpassed estimates in three of the trailing four quarters and missed once, delivering an earnings surprise of 4.99%, on average.
The PNC Financial Services Group, Inc Price, Consensus and EPS Surprise
The company’s activities in the to-be-reported quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for first-quarter earnings of $3.61 has moved marginally downward in the past week, reflecting the bearish sentiments of analysts. Further, the figure indicates 9.7% growth from the year-ago reported number. Our estimate for the metric is $3.64.
Nonetheless, the consensus estimate for revenues is pegged at $5.62 billion, suggesting year-over-year growth of 19.7%. Management expects the top line to be down approximately 3% sequentially. Our estimate for the metric is $5.63 billion.
Now, let’s discuss factors that are likely to have impacted the company’s first-quarter performance:
NII: The pace of loan growth during the first quarter slowed from the prior few quarters due to an uncertain economic environment, the collapse of the Silicon Valley Bank and heightening recession fears. Per the Fed’s latest data, demand for commercial and industrial loans declined during the quarter while commercial real estate loans, credit card loans and other consumer loans were up modestly. This is expected to have a positive impact on the average interest-earning assets of the company.
The company expects average loans to rise 1-2% sequentially. The Zacks Consensus Estimate for average interest-earning assets of $506.5 billion for the quarter indicates a marginal rise sequentially. Our estimate for the metric is $506.3 billion.
The Federal Reserve hiked rates by 50 basis points (bps) in the to-be-reported quarter and 25 bps in fourth-quarter 2022. With this, the policy rate reached 4.75-5% in March 2023, the highest since 2008. Successive rate hikes are likely to have limited any further positive impact on the company’s NII.
Management anticipates NII to be down 1-2% sequentially. Also, the consensus estimate for NII (FTE) is pegged at $3.66 billion, suggesting a decline of 1.5% sequentially. Our estimate for the metric matches the consensus estimate.
Non-Interest Revenues: Since the onset of the quarter under review, uncertainty in the economy due to recession fears have dampened the equity market performance. Thus, asset management revenues are anticipated to have been negatively impacted. The consensus estimate of $346 million for asset management revenues indicates a marginal rise sequentially.
Brokerage fees, comprising part of the company’s consumer services revenues, are likely to have been negatively impacted by the decline in equity markets. Yet, the rising rates and high inflation are expected to have increased transactions and spending volumes, thereby supporting PNC’s card fees in the quarter.
Due to weak markets and global economic uncertainty, deal-making and IPO volumes crashed in first-quarter 2023. Thus, the company’s capital markets-related revenues are likely to have been adversely impacted. The Zacks Consensus Estimate for the same of $316 million indicates a decline of 6% from the prior quarter’s reported number.
Given the slowdown in economic activity during the first quarter, it is likely to be expected that the customers would have been utilizing available overdraft balances to fund business activities. This is likely to have affected the revenues from service charges on deposit accounts.
The purchase mortgage originations are expected to have continued to decline in the to-be-reported quarter while the refinancing originations are likely to have remained almost stable sequentially. Also, mortgage rates during the quarter jumped, with the rate on the 30-year fixed mortgage reaching 6.32% in March, up from around 3% in the prior-year quarter. The rise in mortgage rates has taken a toll on the origination market.
Thus, these factors are expected to have hurt PNC Financial’s residential mortgage revenues. The Zacks Consensus Estimate for the same of $150 million indicates a decline of 18.5% from the prior quarter’s reported number.
Overall, the Zacks Consensus Estimate for non-interest income is pegged at $2 billion, suggesting a 4% decrease sequentially. Management expects fee income to decrease 3-5% sequentially. Our estimate for the metric matches the Zacks Consensus Estimate.
Expenses: The company’s costs are likely to have increased on integration expenses related to the BBVA USA acquisition. Overall, technology investments and general inflationary pressures are likely to have inflated costs while wage inflation is anticipated to have escalated personnel expenses. Nonetheless, its focus on cost-containment measures is likely to reduce expenses. Management expects non-interest expenses to be sequentially down 2-4%. Our estimate for the metric is pegged at $3.64 billion.
What the Zacks Model Reveals
Our proven model predicts an earnings beat for PNC Financial this time around. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for PNC Financial is +1.39%.
Comerica (CMA - Free Report) and Truist Financial (TFC - Free Report) are a couple of bank stocks that you might want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
The Earnings ESP for Comerica is +0.16% and the company carries a Zacks Rank #3 at present. CMA is slated to report first-quarter 2022 results on Apr 20.
The Zacks Consensus Estimate for CMA’s first-quarter earnings has moved marginally south over the past week.
Truist Financial is scheduled to release first-quarter results on Apr 20. TFC currently has an Earnings ESP of +0.59% and a Zacks Rank #3.
The Zacks Consensus Estimate for TFC’s first-quarter earnings has moved south over the past week.
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PNC Financial (PNC) to Post Q1 Earnings: What's in Store?
PNC Financial Services Group, Inc. (PNC - Free Report) is scheduled to report its first-quarter 2023 earnings before the opening bell on Apr 14. The company’s earnings and revenues are expected to have witnessed year-over-year improvement.
In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate on a decline in non-interest income and higher provisions. Yet, an increase in net interest income (NII), supported by higher rates and loan growth, and a decline in expenses were tailwinds.
Notably, PNC Financial has an impressive earnings surprise history. It surpassed estimates in three of the trailing four quarters and missed once, delivering an earnings surprise of 4.99%, on average.
The PNC Financial Services Group, Inc Price, Consensus and EPS Surprise
The PNC Financial Services Group, Inc price-consensus-eps-surprise-chart | The PNC Financial Services Group, Inc Quote
The company’s activities in the to-be-reported quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for first-quarter earnings of $3.61 has moved marginally downward in the past week, reflecting the bearish sentiments of analysts. Further, the figure indicates 9.7% growth from the year-ago reported number. Our estimate for the metric is $3.64.
Nonetheless, the consensus estimate for revenues is pegged at $5.62 billion, suggesting year-over-year growth of 19.7%. Management expects the top line to be down approximately 3% sequentially. Our estimate for the metric is $5.63 billion.
Now, let’s discuss factors that are likely to have impacted the company’s first-quarter performance:
NII: The pace of loan growth during the first quarter slowed from the prior few quarters due to an uncertain economic environment, the collapse of the Silicon Valley Bank and heightening recession fears. Per the Fed’s latest data, demand for commercial and industrial loans declined during the quarter while commercial real estate loans, credit card loans and other consumer loans were up modestly. This is expected to have a positive impact on the average interest-earning assets of the company.
The company expects average loans to rise 1-2% sequentially. The Zacks Consensus Estimate for average interest-earning assets of $506.5 billion for the quarter indicates a marginal rise sequentially. Our estimate for the metric is $506.3 billion.
The Federal Reserve hiked rates by 50 basis points (bps) in the to-be-reported quarter and 25 bps in fourth-quarter 2022. With this, the policy rate reached 4.75-5% in March 2023, the highest since 2008. Successive rate hikes are likely to have limited any further positive impact on the company’s NII.
Management anticipates NII to be down 1-2% sequentially. Also, the consensus estimate for NII (FTE) is pegged at $3.66 billion, suggesting a decline of 1.5% sequentially. Our estimate for the metric matches the consensus estimate.
Non-Interest Revenues: Since the onset of the quarter under review, uncertainty in the economy due to recession fears have dampened the equity market performance. Thus, asset management revenues are anticipated to have been negatively impacted. The consensus estimate of $346 million for asset management revenues indicates a marginal rise sequentially.
Brokerage fees, comprising part of the company’s consumer services revenues, are likely to have been negatively impacted by the decline in equity markets. Yet, the rising rates and high inflation are expected to have increased transactions and spending volumes, thereby supporting PNC’s card fees in the quarter.
Due to weak markets and global economic uncertainty, deal-making and IPO volumes crashed in first-quarter 2023. Thus, the company’s capital markets-related revenues are likely to have been adversely impacted. The Zacks Consensus Estimate for the same of $316 million indicates a decline of 6% from the prior quarter’s reported number.
Given the slowdown in economic activity during the first quarter, it is likely to be expected that the customers would have been utilizing available overdraft balances to fund business activities. This is likely to have affected the revenues from service charges on deposit accounts.
The purchase mortgage originations are expected to have continued to decline in the to-be-reported quarter while the refinancing originations are likely to have remained almost stable sequentially. Also, mortgage rates during the quarter jumped, with the rate on the 30-year fixed mortgage reaching 6.32% in March, up from around 3% in the prior-year quarter. The rise in mortgage rates has taken a toll on the origination market.
Thus, these factors are expected to have hurt PNC Financial’s residential mortgage revenues. The Zacks Consensus Estimate for the same of $150 million indicates a decline of 18.5% from the prior quarter’s reported number.
Overall, the Zacks Consensus Estimate for non-interest income is pegged at $2 billion, suggesting a 4% decrease sequentially. Management expects fee income to decrease 3-5% sequentially. Our estimate for the metric matches the Zacks Consensus Estimate.
Expenses: The company’s costs are likely to have increased on integration expenses related to the BBVA USA acquisition. Overall, technology investments and general inflationary pressures are likely to have inflated costs while wage inflation is anticipated to have escalated personnel expenses. Nonetheless, its focus on cost-containment measures is likely to reduce expenses. Management expects non-interest expenses to be sequentially down 2-4%. Our estimate for the metric is pegged at $3.64 billion.
What the Zacks Model Reveals
Our proven model predicts an earnings beat for PNC Financial this time around. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for PNC Financial is +1.39%.
Zacks Rank: The company currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Stocks That Warrant a Look
Comerica (CMA - Free Report) and Truist Financial (TFC - Free Report) are a couple of bank stocks that you might want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
The Earnings ESP for Comerica is +0.16% and the company carries a Zacks Rank #3 at present. CMA is slated to report first-quarter 2022 results on Apr 20.
The Zacks Consensus Estimate for CMA’s first-quarter earnings has moved marginally south over the past week.
Truist Financial is scheduled to release first-quarter results on Apr 20. TFC currently has an Earnings ESP of +0.59% and a Zacks Rank #3.
The Zacks Consensus Estimate for TFC’s first-quarter earnings has moved south over the past week.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.