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7 Reasons to Add PNC Financial (PNC) to Your Portfolio Now
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With operational efficiency through its cost-containment efforts and a strong capital position, The PNC Financial Services Group, Inc. (PNC - Free Report) can be a solid bet now. The company’s focus on the most attractive business mixes in the banking industry to tackle macroeconomic headwinds and strategic priorities including core technology infrastructure is expected to yield positive results for the stock.
Further, the anticipated hike in interest rates is likely to bring further stability to top-line generation, which creates a buying opportunity for long-term horses. Though increasing risk and compliance requirements remain a concern for PNC Financial, given the strictly regulated nature of banking operations, management is taking steps to tackle expense growth and reinstate operating leverage. This, in turn, is likely to make the growth path smoother.
Therefore, it’s a good idea to add stocks with robust fundamentals and long-term growth opportunities to your portfolio, at the current level.
With $366.4 billion in assets as of Dec 31, 2016, PNC Financial’s strengths include solid top-line performance, consistent earnings growth and steady capital deployment activities.
7 Reasons Why PNC Financial is a Must Buy
Revenue Growth: PNC Financial continues to make steady progress toward improving its top line. While a low-rate environment affects growth in interest income, the company's fee income has grown at a five-year CAGR (2012–2016) of 3.6%, with a slight fall recorded in 2014 and 2016.
The company’s projected sales growth (F1/F0) of 4.50% (as against the S&P 500 average of about 4.25%) indicates constant upward momentum in revenues.
Earnings Per Share Strength: Earnings are expected to show an upswing in the near term, as the company’s projected EPS growth (F1/F0) is 8.6% compared to the industry average rate of 8.4%. Also, PNC Financial recorded an average positive earnings surprise of 3.17%, over the trailing four quarters.
Prudent Expense Management: PNC Financial’s non-interest expenses have declined at a CAGR of 2.5% in the last five years (2012–2016), despite a marginal rise in expenses in 2016. Further, the company has successfully realized its 2015 and 2016 continuous improvement savings program ('CIP') goals of $500 million and $400 million, respectively. For 2017, management projects CIP target of $350 million.
Favorable Zacks Rank: PNC Financial currently carries a Zacks Rank #2 (Buy). This has been driven by the upward estimate revisions, over the last 60 days. For 2017 and 2018, the Zacks Consensus Estimate moved up around 4.3% and 4.4% to $7.93 and $8.78, respectively, over the same time period.
Steady Capital Deployment: PNC Financial remains focused on managing capital levels efficiently. This is well evident from the approval of the 2016 Capital Plan. Following the Federal Reserve’s approval, the company raised its quarterly common stock dividend by 8% and authorized a $2-billion share repurchase program. In Jan 2017, the company announced a $300-million increase in its common stock repurchase programs for the four-quarter period ending Jun 30, 2017, in addition to the share repurchase programs of $2 billion. Such capital deployment activities are likely to boost investors’ confidence.
Stock is Undervalued: PNC Financial has a P/E ratio and P/B ratio of 16.12x and 1.32x, compared to the S&P 500 average of 18.67x and 3.18x, respectively. Based on these ratios, the stock seems undervalued.
Share Price Movement: PNC Financial’s shares gained 40.7% over the last six months, compared with 32.4% growth in the Zacks categorized Banks-Major Regional industry.
U.S. Bancorp (USB - Free Report) has been witnessing upward estimate revisions for the last 60 days. Also, the company’s shares have risen nearly 26.1% over the last six months. It presently holds a Zacks Rank #2.
Enterprise Financial Services Corp (EFSC - Free Report) has been witnessing upward estimate revisions for the last 60 days. Over the last six months, the company’s share price has been up more than 39%. It carries a Zacks Rank #2.
Zacks' Top 10 Stocks for 2017
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7 Reasons to Add PNC Financial (PNC) to Your Portfolio Now
With operational efficiency through its cost-containment efforts and a strong capital position, The PNC Financial Services Group, Inc. (PNC - Free Report) can be a solid bet now. The company’s focus on the most attractive business mixes in the banking industry to tackle macroeconomic headwinds and strategic priorities including core technology infrastructure is expected to yield positive results for the stock.
Further, the anticipated hike in interest rates is likely to bring further stability to top-line generation, which creates a buying opportunity for long-term horses. Though increasing risk and compliance requirements remain a concern for PNC Financial, given the strictly regulated nature of banking operations, management is taking steps to tackle expense growth and reinstate operating leverage. This, in turn, is likely to make the growth path smoother.
Therefore, it’s a good idea to add stocks with robust fundamentals and long-term growth opportunities to your portfolio, at the current level.
With $366.4 billion in assets as of Dec 31, 2016, PNC Financial’s strengths include solid top-line performance, consistent earnings growth and steady capital deployment activities.
7 Reasons Why PNC Financial is a Must Buy
Revenue Growth: PNC Financial continues to make steady progress toward improving its top line. While a low-rate environment affects growth in interest income, the company's fee income has grown at a five-year CAGR (2012–2016) of 3.6%, with a slight fall recorded in 2014 and 2016.
The company’s projected sales growth (F1/F0) of 4.50% (as against the S&P 500 average of about 4.25%) indicates constant upward momentum in revenues.
Earnings Per Share Strength: Earnings are expected to show an upswing in the near term, as the company’s projected EPS growth (F1/F0) is 8.6% compared to the industry average rate of 8.4%. Also, PNC Financial recorded an average positive earnings surprise of 3.17%, over the trailing four quarters.
Prudent Expense Management: PNC Financial’s non-interest expenses have declined at a CAGR of 2.5% in the last five years (2012–2016), despite a marginal rise in expenses in 2016. Further, the company has successfully realized its 2015 and 2016 continuous improvement savings program ('CIP') goals of $500 million and $400 million, respectively. For 2017, management projects CIP target of $350 million.
Favorable Zacks Rank: PNC Financial currently carries a Zacks Rank #2 (Buy). This has been driven by the upward estimate revisions, over the last 60 days. For 2017 and 2018, the Zacks Consensus Estimate moved up around 4.3% and 4.4% to $7.93 and $8.78, respectively, over the same time period.
Steady Capital Deployment: PNC Financial remains focused on managing capital levels efficiently. This is well evident from the approval of the 2016 Capital Plan. Following the Federal Reserve’s approval, the company raised its quarterly common stock dividend by 8% and authorized a $2-billion share repurchase program. In Jan 2017, the company announced a $300-million increase in its common stock repurchase programs for the four-quarter period ending Jun 30, 2017, in addition to the share repurchase programs of $2 billion. Such capital deployment activities are likely to boost investors’ confidence.
Stock is Undervalued: PNC Financial has a P/E ratio and P/B ratio of 16.12x and 1.32x, compared to the S&P 500 average of 18.67x and 3.18x, respectively. Based on these ratios, the stock seems undervalued.
Share Price Movement: PNC Financial’s shares gained 40.7% over the last six months, compared with 32.4% growth in the Zacks categorized Banks-Major Regional industry.
Stocks to Consider
Bank of America Corporation (BAC - Free Report) has been witnessing upward estimate revisions for the last 60 days. Further, the stock surged over 59.3% over the past six months. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
U.S. Bancorp (USB - Free Report) has been witnessing upward estimate revisions for the last 60 days. Also, the company’s shares have risen nearly 26.1% over the last six months. It presently holds a Zacks Rank #2.
Enterprise Financial Services Corp (EFSC - Free Report) has been witnessing upward estimate revisions for the last 60 days. Over the last six months, the company’s share price has been up more than 39%. It carries a Zacks Rank #2.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>