Balanced View on PNC Financial - Analyst Blog

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On May 19, 2014, we issued an updated research report on The PNC Financial Services Group, Inc. PNC. The company exhibits decent fundamentals amid a competitive banking environment.

PNC Financial is driving operational efficiency through to its efforts to contain costs. During 2013, management achieved more than $775 million in expense savings, modestly outpacing the target of $700 million. Further, management has set a target to lower costs by an additional $500 million in 2014.

PNC Financial's solid capital position is reflected by the successful clearance of the 2014 stress test. Further, 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, the company's board of directors approved a share repurchase program of up to $1.5 billion. We believe such efficient capital deployment activities will continue to boost investors' confidence in the stock.

Further, PNC Financial's first-quarter 2014 earnings per share of $1.82 outpaced the Zacks Consensus Estimate by 9.6%. Notably, the company delivered positive earnings surprises in all the trailing 4 quarters with an average beat of 11.3%.

Additionally, analysts' bullish stance on the stock was reflected in the movement of the Zacks Consensus Estimate over the past 60 days. For 2014, the Zacks Consensus Estimate advanced 2.1% to $7.14 per share. Also, it moved north nearly 1% to $7.58 per share for 2015.

Despite the positives, we remain cautious owing to several issues faced by PNC Financial that pose a threat to the company's financials. These include absence of steady and sustainable growth in its net interest income and net interest margin amid a low interest rate environment, litigation issues and the prevailing stringent regulatory landscape.

PNC Financial currently carries a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

KCG Holdings, Inc. KCG, Woori Finance Holdings Co., Ltd. WF and Central Pacific Financial Corp. CPF are among the better-ranked stocks in the finance sector. All these stocks hold a Zacks Rank #1 (Strong Buy).


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CENTRAL PAC FIN CPF: Free Stock Analysis Report

KCG HOLDINGS KCG: Free Stock Analysis Report

PNC FINL SVC CP PNC: Free Stock Analysis Report

WOORI FIN-ADR WF: Get Free Report

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