On Dec 15, 2015, we issued an updated research report on The PNC Financial Services Group, Inc. PNC. Shares of this Pennsylvania-based banking giant have recorded a year-to-date return of 7%. Moreover, PNC Financial has outpaced the Zacks Consensus Estimate in the last four trailing quarters, with an average beat of 5.26%.
We believe this growth story has been aided by the company’s cost-containment efforts to drive operational efficiency. Also, it continues to benefit from steady loan and deposit growth along with higher fee income; and continues to enhance shareholder value with dividend and buybacks.
We believe PNC Financial is well positioned to drive operational efficiency through its cost effective measures. Management succeeded in attaining 75% of its 2015 continuous improvement savings program (“CIP”) goal of $500 million within the first nine months of 2015, and remains confident of achieving its full-year objective. As a result of this, expenses are likely to remain stable sequentially in the fourth quarter; and decline approximately 1% for full-year 2015 relative to 2014.
With one of the most attractive business mixes in the banking industry, PNC Financial continues to make steady progress toward improving its top line. Though the low rate environment is challenging for net interest income (NII) growth, the company’s fee income has depicted upward movement. Notably, fee income grew 3.7% year over year in the first nine months of 2015.
Additionally, driven by a strong capital position the company remains committed to enhance shareholder value. Following the Federal Reserve's approval of its 2015 capital plan, the company announced a 6% hike in its quarterly dividend in April 2015. The capital plan also includes a new share repurchase authorization to buy back shares worth nearly $2.875 billion.
Over the past 30 days, the Zacks Consensus Estimate increased 1% for both 2015 and 2016 to $7.29 and $7.49 per share, respectively. Hence, PNC Financial carries a Zacks Rank #2 (Buy).
Key Picks from the Sector
Other stocks in the finance space worth considering include Associated Banc-Corp ASB, Old Second Bancorp Inc. OSBC and Civista Bancshares, Inc. CIVB. All the three stocks carry a Zacks Rank #2.
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