As part of its 2018 capital plan (approved by the Federal Reserve), The PNC Financial Services Group, Inc. (PNC - Free Report) board of directors announced a 27% hike in the company’s quarterly common stock dividend. The revised quarterly dividend is 95 cents per share compared with the previous figure of 75 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 terms of its capital strength. Prior to this hike, the company had raised its dividend by 36% (from 55 cents to 75 cents per share) in July 2017.
Considering Thursday’s closing price of $135.58 per share, the dividend yield is currently valued at 2.8%.
Investors interested in this Zacks Rank #3 (Hold) 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. A rising rate environment aids interest income growth. The company's fee income witnessed a five-year CAGR (2013–2017) of 1.3%, with the increasing trend continuing in first-quarter 2018.
The company’s projected sales growth (F1/F0) of 4.7% indicates constant upward momentum in revenues.
Earnings Per Share Strength: PNC Financial witnessed earnings growth of 3.3% over the last three-five years. In addition, the company’s long-term (three-five years) estimated EPS growth rate of 11.14% promises rewards for investors in the long run. Further, earnings are anticipated to display an upswing in the near term with the company’s projected EPS growth (F1/F0) of 23.7%. Also, PNC Financial recorded an average positive earnings surprise of 2.6% over the trailing four quarters.
Prudent Expense Management: PNC Financial is driving operational efficiency through cost-containment efforts. Though rise in non-interest expenses was experienced in 2017 and first three months of 2018, on rising personnel and equipment costs, expenses declined at a CAGR of 2.5% over five years (2012-2016). Further, 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.
Stock is Undervalued: The stock currently has a Value Score of B. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.
Share Price Movement: PNC Financial shares have gained 7.1% in the past year compared with 4.1% growth recorded by the industry.
Stocks to Consider
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