Back to top

Image: Bigstock

PNC Financial (PNC) Declares 36% Dividend Hike: Time to Buy?

Read MoreHide Full Article

As part of its 2017 capital plan (approved by the Federal Reserve), The PNC Financial Services Group, Inc. (PNC - Free Report) board of directors announced a 36% hike in the company’s quarterly common stock dividend. The revised quarterly dividend now comes in at 75 cents per share compared with the previous figure of 55 cents. This dividend will be paid on the next business day of Aug 5 to shareholders of record as of Jul 17.

Since 2011, PNC Financial has been raising its dividend annually. From paying 10 cents a share as quarterly dividend during the financial crisis, the company has come a long way in displaying its capital strength. Prior to this hike, the company had raised its dividend by 8% (from 51 cents to 55 cents per share) in Jul 2016.

Considering Thursday’s closing price of $126.01 per share, the dividend yield is currently valued at 2.4%.

Investors interested in this Zacks Rank #2 (Buy) stock can have a look at the bank’s fundamentals and growth opportunities.

Revenue Growth: PNC Financial continues to make steady progress toward improving its top line. While a low-rate environment, though improving, is challenging for interest income growth, 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 positive trend continued in first-quarter 2017.

The company’s projected sales growth (F1/F0) of 6.17% (as against the S&P 500 average of about 4.91%) indicates constant upward momentum in revenues.

Earnings Per Share Strength: Earnings are anticipated to display an upswing in the near term, as the company’s projected EPS growth (F1/F0) is 12.48% compared to the industry average rate of 11.50%. Also, PNC Financial recorded an average positive earnings surprise of 4.95%, over the trailing four quarters.

Prudent Expense Management: Though a marginal rise in non-interest expenses was experienced in 2016 as well as first-quarter 2017, expenses declined at a CAGR of 2.5% over the last five years (2012-2016). Further, PNC Financial successfully realized its 2015 and 2016 continuous improvement savings program ('CIP') goals of $500 million and $400 million, respectively. For 2017, management anticipates CIP target of $350 million.

Stock is Undervalued: PNC Financial has a P/E ratio and P/B ratio of 15.36x and 1.33x compared to the S&P 500 average of 18.87x and 3.19x, respectively. Based on these ratios, the stock seems undervalued.

Share Price Movement: PNC Financial’s shares gained 6.6% over the past six months compared with 7.5% growth recorded by the Zacks categorized Regional Banks-Major industry.

Stocks to Consider

BOK Financial Corporation (BOKF - Free Report) has been witnessing upward estimate revisions for the last 60 days. Over the last one year, the company’s share price has been up more than 38%. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Comerica Incorporated (CMA - Free Report) has been witnessing upward estimate revisions for the last 30 days. Additionally, the stock soared nearly 78%, over the past one year. It currently has a Zacks Rank #2.

BancFirst Corporation (BANF - Free Report) has been witnessing upward estimate revisions for the last 30 days. Also, the company’s shares have risen nearly 63.1%, over the last one year. It holds a Zacks Rank #2, at present.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>

Published in