On Aug 22, 2014, we issued an updated research report on
The PNC Financial Services Group, Inc.
). The Pennsylvania-based banking giant is driving operational
efficiency through cost containment.
During 2013, management achieved more than $775 million in expense
savings, outpacing the target of $700 million. Though non-interest
expenses for the second-quarter 2014 reflects a modest rise from
the previous quarter due to seasonality, the first half of 2014
witnessed a 4% year-over-year decline.
Management intends to remain focused on its cost control measures
and expects non-interest expenses to further decline in 2014.
Owing to the Federal Reserve's approval of its capital plan, the
company increased the cash dividend on common stock to 48 cents per
share, up 9% from the prior dividend. Also, it has announced a
share repurchase program of up to $1.5 billion. The latest capital
deployment structure makes it attractive to income-seeking
We believe such capital deployment activities will continue to
boost investors' confidence in the stock.
Further, PNC Financial has been growing organically with the help
of its financial strength. As of Jun 30, 2014, total loans
increased 6% year over year and total deposits rose 5%.
However, litigation issues and the prevailing stringent regulatory
landscape will continue to mar PNC Financial's growth. Further,
management expects net interest income to modestly decrease owing
to the continued decline in purchase accounting accretion and
interest rate spread compression.
Analysts' mixed stance on the stock was reflected in the estimate
revisions over the past 30 days. For 2014, the Zacks Consensus
Estimate remained stable at $7.16 per share. It moved up marginally
to $7.43 per share for 2015.
PNC Financial currently carries a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Some better-ranked stocks in the finance space include Select
Bancorp, Inc. (
), Piper Jaffray Companies (
) and Arlington Asset Investment Corp. (
). All these stocks sport a Zacks Rank #1 (Strong Buy).
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PNC FINL SVC CP (PNC): Free Stock Analysis
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