The PNC Financial Services Group, Inc.
) is scheduled to report its second-quarter 2014 results on Jul 16.
The company delivered positive earnings surprises in the trailing 4
quarters. Lower provision and prudent expense management drove
earnings per share of $1.82 in first-quarter 2014, outpacing the
Zacks Consensus Estimate by 16 cents.
Will PNC Financial be able to keep the earnings streak alive in
this quarter as well? Let's see how things have shaped up for this
Factors to Influence Q2 Results
The overall banking sector did not witness any significant change
in the second quarter from the first. While soft trading volumes,
high legal costs, lower fixed income were on the downside, the
quarter was characterized by increased mergers and acquisitions
(M&A) and IPOs, aggressive cost control measures, and a
favorable equity and asset market backdrop.
What Management Expects?
Fee income is expected to increase in the low single-digits. This
may act as a catalyst to boost non-interest income, offsetting the
downward trend in net interest income (NII) to some extent.
Further, management anticipates provision for credit losses to be
in the range of $100.0-$150.0 million in the quarter. This
expectation could be based on the gradual economic recovery that
led to a decline in credit losses in the last few quarters.
Among others factors, modest loan growth could act as a positive.
Notably, both loan and deposit balances exhibited growth in the
last few quarters.
On the other hand, higher expenses and a lower NIM are expected to
mar results this time.
Management anticipates expenses to be up by the low single-digits,
owing to seasonality in the quarter. However, it should be noted
that the company is focused on expense management initiatives.
Management projects NII to fall moderately due to continued decline
in purchase accounting accretion and spread compression. We
observed that the company has experienced a volatile trend in NII
and net interest margin (NIM) growth since 2009 and has not been
able to reverse the trend in the recent quarters.
Activities of PNC Financial during the quarter were inadequate to
win analysts' confidence. As a result, the Zacks Consensus Estimate
for the quarter declined 0.6% to $1.77 per share over the last 7
Our proven model shows that PNC Financial is likely to beat the
Zacks Consensus Estimate in the second quarter. That is because a
stock needs to have both a positive
and a Zacks Rank #1 (Strong Buy) or at least #2 (Buy) or #3 (Hold)
for this to happen. The favorable position of PNC Financial is
: The Earnings ESP for PNC Financial is +0.57%. This is because the
Most Accurate estimate of $1.78 is above the Zacks Consensus
Estimate of $1.77 per share.
: PNC Financial's Zacks Rank #3 further increases the predictive
power of ESP.
Stocks That Warrant a Look
Here are some other stocks you may want to consider, as our model
shows that these have the right combination of elements to post an
earnings beat this quarter:
Fifth Third Bancorp
) has an earnings ESP of +4.44% and carries a Zacks Rank #3. It is
scheduled to report its second-quarter results on Jul 17.
Capital One Financial Corp.
) has an earnings ESP of +1.12% and carries a Zacks Rank #2. It is
expected to report its second-quarter results on Jul 17.
Regions Financial Corp.
) has an earnings ESP of +4.76% and carries a Zacks Rank #3. It is
scheduled to report its second-quarter results on Jul 22.
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