Why it's Wise to Hold PNC Financial (PNC) Stock for Now

Shutterstock photo

On Jun 19, we issued an updated research report on The PNC Financial Services Group, Inc.PNC . The company's fee-income growth and cost saving initiatives to generate positive operating leverage are encouraging. However, low interest income and margin pressure remain major concerns.

PNC Financial's stock has gained 46.4% over the last one year outperforming the Zacks categorized Banks - Major Regional industry's rally of 38.1%.

The Zacks Consensus Estimate for the current year has been revised slightly upward over the last 30 days. The stock currently carries a Zacks Rank #3 (Hold).

The company's fee income witnessed a compound annual growth rate (CAGR) of 3.6% over the last five years (ending 2016). Per management, the execution of strategic initiatives is likely to result in mid-single digit growth in fee income in second-quarter 2017. Further, PNC Financial has diligently reduced expenses at a CAGR of 2.5% over the last five years (ended 2016) through various cost-control measures.

PNC Financial's strong capital position allows it to undertake impressive capital deployment activities. In Jan 2017, the company increased its share repurchase program by $300 million for the four-quarter period ending Jun 30, 2017, in addition to the share repurchase programs of $2 billion. Moreover, it hiked common stock dividend by 8% in Jun 2016.

Owing to the low interest rate environment for a long period, the company faced a decline in its net interest income at a five-year(2012-2016) CAGR of 3.4%. Also, net interest margin fell to 2.73% in 2016 from 3.94% in 2012. Despite the latest Fed rate hikes, we believe that the margin pressure would take some time to ease.

Stocks to Consider

Some stocks worth considering in the financial space include Comerica Incorporated CMA , M&T Bank Corporation MTB and Lakeland Bancorp, Inc. LBAI . All these stocks hold a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Comerica has witnessed an upward earnings estimate revision of 8.8% for the current year in the past 60 days. Also, its shares have rallied 78.4% over the last one year.

M&T Bank's earnings estimates have been revised upward by 2.4% for the current year, in the past 60 days. Also, over the last one year, its shares have gained 40.8%.

Lakeland has witnessed an upward earnings estimate revision of 2.8% for the current year, in the past 60 days. Also, its shares have jumped 75.0%, over the last one year.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana. Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

PNC Financial Services Group, Inc. (The) (PNC): Free Stock Analysis Report

Comerica Incorporated (CMA): Free Stock Analysis Report

M&T Bank Corporation (MTB): Free Stock Analysis Report

Lakeland Bancorp, Inc. (LBAI): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: PNC , CMA , MTB , LBAI

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by BankRate.com