On May 28, we issued an updated research report on The PNC Financial Services Group (PNC - Free Report) . The company’s cost-containment efforts to drive operational efficiency along with steady loan and deposit growth indicate its upside potential. However, lack of loan diversification remains a concern.
The company outpaced the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat of 2.6%.
In the last 30 days, the Zacks Consensus Estimate has moved up slightly to $10.54 for the current year. Hence, PNC Financial carries a Zacks Rank #3 (Hold).
Further, shares of this banking giant have recorded a year-to-date return of 3.7% against slight decline for the industry.
PNC Financial’s efforts to reduce expenses keep us encouraged. The company successfully realized its continuous improvement savings program (CIP) goals for the last three years (ended 2017) of about $1.25 billion. For 2018, management has a CIP target of $250 million. The company's consistent focus on core expense management might help generate positive operating leverage in the quarters ahead.
The company’s strong balance sheet position enables it to strengthen business through strategic initiatives. In 2017, PNC Financial acquired companies, which helped it expand product offering and presence. Thus, the company’s bottom line is likely to get further support if it continues to make planned investments.
With one of the most attractive business mixes in the banking industry, PNC Financial continues to make steady progress toward improving its top line. A rising rate environment has helped ease margin pressure greatly, in turn boosting its net interest income. Further, the company’s fee income depicted upward movement in the last reported quarter and is expected to continue increasing with the execution of strategic initiatives.
However, a significant portion of PNC Financial’s loan portfolio comprises commercial loans. Such high exposure to commercial loans depicts lack of diversification, which can be risky for the company amid a challenging economy and competitive markets.
Stocks to Consider
Northern Trust Corporation (NTRS - Free Report) has witnessed an 5.1% upward estimate revision for current-year earnings in the last 60 days. Over the past six months, the company’s share price has been up 9.4%. It currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Comerica Incorporated’s (CMA - Free Report) 2018 earnings estimates has been revised 4.9% upward for the last 60 days. Additionally, the stock has jumped 18.1%, in six months’ time. It currently carries a Zacks Rank #2.
M&T Bank Corporation (MTB - Free Report) has witnessed upward estimate revision of 2.3% for the current-year earnings, over the last 60 days. Also, the company’s shares have risen 6.4% in the last six months. It carries a Zacks Rank of 2, at present.
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