On Feb 18, 2014, we issued an updated research report on The PNC Financial Services Group, Inc. (PNC). The company recently reported impressive fourth-quarter 2013 results that included top-line growth, strong financials and efficient expense management. However, we believe that a sluggish economic recovery and the existing low interest-rate environment will continue to keep the company’s bottom line under pressure in the near term.
PNC Financial’s earnings per share of $1.85 outpaced the Zacks Consensus Estimate of $1.64. Further, the company reported net income attributable to common shareholders of $998.0 million in the reported quarter, up 50% from the year-ago quarter.
With this, the company delivered positive earnings surprises in all the four quarters of 2013 with an average beat of 11.92%.
Results for the quarter were aided by a decrease in both operating expenses and provision for credit losses. Further, marginal top-line improvement, a better credit quality and healthy capital ratios were the positives. However, on the flip side, lower net interest income (NII) was a concern.
Although we are encouraged by PNC Financial’s diverse business portfolio, strategic acquisitions and prudent expense management, the company’s performance owing to declining NII and elevated mortgage repurchase liability remain the concerns.
Analysts’ mixed opinion on PNC Financial’s future performance is evident from the movement of the Zacks Consensus Estimate over the past 30 days. For 2014, it inched up 0.1% to $6.99 while for 2015 it declined 0.1% to $7.53.
PNC Financial currently carries a Zacks Rank #2 (Buy).
Stock That Warrant a Look
Some better-ranked banks include SY Bancorp Inc. (SYBT), Summit State Bank (SSBI) and Old Line Bancshares Inc. (OLBK). All these stocks carry a Zacks Rank #1 (Strong Buy).
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