Owing to the fact that most of the finance companies have delivered better-than-expected results for the quarter ended Sep 30, 2016, the banking sector as a whole has witnessed a decent price improvement. Further, with higher chances of the Fed raising rates next month, banking stocks are expected to witness a further rise in revenues in the quarters ahead.
We bring to you The PNC Financial Services Group, Inc. (PNC - Free Report) , which has strong fundamentals and good growth prospects. The company has a market capitalization of $52.9 billion and its third-quarter 2016 earnings outpaced the Zacks Consensus Estimate.
Notably, it has witnessed an upward earnings estimate revision for the current year in the past 30 days, indicating analysts’ optimism about its growth prospects.
Further, this Zacks Rank #2 (Buy) stock has risen nearly 12.8% year to date.
Also, the stock has witnessed a decent earnings surprise history, beating the Zacks Consensus Estimate in three of the trailing four quarters. This is depicted in the chart below:
Moreover, the company has some other aspects that make it an attractive investment option.
Declining Expenses: Over the last four years (2012-2015), PNC Financial’s expenses declined at a CAGR of 3.4%. The company has been successful in savings. It saved $500 million in 2015 and is well positioned to achieve its 2016 savings target of $400 million.
Stock Looks Undervalued: PNC Financial’s Price/Book Ratio (P/B) ratio is 1.22, lower than the industry average of 1.31. Also, its PEG ratio is 2.23 as against the industry average of 2.33. These indicate that the stock is undervalued.
Strong Balance Sheet: The company’s loans and deposits have exhibited an increasing trend, growing at a CAGR of 6.5% and 6.3%, respectively, over the last six years (2010-2015). Further, it remains focused on improving its consumer deposits, as these are Liquidity Coverage Ratio-friendly and more elastic to fluctuations in price.
Other Stocks to Consider
Some other favorably placed stocks in the finance space include Carolina Financial Corp. (CARO - Free Report) , Bank of America Corp. (BAC - Free Report) and KeyCorp. (KEY - Free Report) .
Carolina has witnessed an upward earnings estimate revision of 12.9% for the current year over the past 30 days. Also, its share price is up 41.9% year to date. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bank of America carries a Zacks Rank #2 and has witnessed an upward earnings estimate revision of 9.8% for the current year for the past 30 days. Moreover, its share price is up 17.4% year to date.
KeyCorp also carries a Zacks Rank #2. It has witnessed an upward earnings estimate revision of 4.8% for the current year for the past 30 days and its share price has surged 26.8% year to date.
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