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PNC Financial (PNC) Up 19.3% in Six Months: Will It Continue?
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Shares of PNC Financial Services (PNC - Free Report) have appreciated 19.3% in the past six months compared with the industry’s growth of 16.8%. The stock has also outperformed the S&P 500 Index, which moved up 8.4% in the same frame.
The company’s solid balance sheet and strategic initiatives continue to support its financials.
Analysts are bullish regarding this Zacks Rank #3 (Hold) stock. In the past seven days, the Zacks Consensus Estimate for earnings of $12.74 and $14.43 per share has moved 3.1% and 1.8% upward for 2024 and 2025, respectively. The projections indicate a drop of 1.3% for this year and growth of 5.9% for 2025.
Image Source: Zacks Investment Research
Now, let’s discuss some key factors that are likely to provide impetus to the PNC stock.
Long-Term Initiatives Looks Encouraging
PNC Financial announced plans to invest $1 billion to open more than 100 branches and renovate more than 1,200 existing locations by 2028. With this, the bank is poised to improve its branch network and extend access to banking services for customers and communities nationwide.
Such expansion moves will enable PNC Financial to bolster its presence in key locations, including Austin, Dallas, Denver, Houston, Miami and San Antonio. With this, the bank will boost the reach of its coast-to-coast branch network. Apart from new branch openings, PNC Financial is also focusing on the renovation of its existing locations across the country, aiming to upgrade its customer experience. This will likely augment its retail banking business, which is a major revenue source for PNC.
Strategic Acquisitions to Drive Growth
The company is committed to strengthening its business through strategic acquisitions. In May 2024, the bank extended its partnership with TCW Group to offer private credit solutions to middle-market companies. It aims to raise $2.5 billion in investor equity capital for investment in its first year. This partnership will allow the bank to gain a significant share of the expanding private credit market.
Solid Balance Sheet
PNC benefits from a strong balance sheet position. Total deposits and loans have witnessed a four-year (2019-2023) CAGR of 9.9% and 7.6%, respectively. Although the loan balance declined in the first half of 2024, the deposit balance growth continued in the same period. Capitalizing on growth opportunities, in October 2023, the company acquired loan commitments from Signature Bank worth approximately $16 billion. This is expected to support loan growth in the upcoming quarters. A well-diversified deposit base will further strengthen its financial position. While we project loans and deposit balances to decline marginally and 5%, respectively, in 2024, they will rebound and rise 4.5% and 3% in 2025 and 2026.
Capital Distribution
PNC Financial continues to progress with its capital distribution strategy. In July 2024, it sequentially hiked quarterly cash dividends on common stock by 3.2% to $1.60 per share. Apart from regular dividend hikes, the company also has a share repurchase program in place. A 100-million share repurchase plan was authorized in second-quarter 2022. In the first half of 2024, the company repurchases 1.6 million shares for $0.2 billion. As of Jun 30, 2024, nearly 43% of shares were available for repurchase under the authorization. PNC Financial expects to maintain a similar level of share repurchase activities in the upcoming quarters of 2024. Given the company’s earnings and liquidity strength, its capital-distribution activities seem sustainable and are likely to stoke investors’ confidence in the stock.
Upbeat Q3 Guidance
The company expects average loans to remain stable from the second quarter’s reported figure of $319.9 billion.
Management anticipates NII to rise 1-2% from $3.3 billion reported in second-quarter 2024.
Fee income is expected to rise 1-2% from $1.77 billion reported in the second quarter of 2024.
Other non-interest income is projected to be between $150 million and $200 million compared with $332 million reported in second-quarter 2024.
Image: Bigstock
PNC Financial (PNC) Up 19.3% in Six Months: Will It Continue?
Shares of PNC Financial Services (PNC - Free Report) have appreciated 19.3% in the past six months compared with the industry’s growth of 16.8%. The stock has also outperformed the S&P 500 Index, which moved up 8.4% in the same frame.
The company’s solid balance sheet and strategic initiatives continue to support its financials.
Analysts are bullish regarding this Zacks Rank #3 (Hold) stock. In the past seven days, the Zacks Consensus Estimate for earnings of $12.74 and $14.43 per share has moved 3.1% and 1.8% upward for 2024 and 2025, respectively. The projections indicate a drop of 1.3% for this year and growth of 5.9% for 2025.
Now, let’s discuss some key factors that are likely to provide impetus to the PNC stock.
Long-Term Initiatives Looks Encouraging
PNC Financial announced plans to invest $1 billion to open more than 100 branches and renovate more than 1,200 existing locations by 2028. With this, the bank is poised to improve its branch network and extend access to banking services for customers and communities nationwide.
Such expansion moves will enable PNC Financial to bolster its presence in key locations, including Austin, Dallas, Denver, Houston, Miami and San Antonio. With this, the bank will boost the reach of its coast-to-coast branch network. Apart from new branch openings, PNC Financial is also focusing on the renovation of its existing locations across the country, aiming to upgrade its customer experience. This will likely augment its retail banking business, which is a major revenue source for PNC.
Strategic Acquisitions to Drive Growth
The company is committed to strengthening its business through strategic acquisitions. In May 2024, the bank extended its partnership with TCW Group to offer private credit solutions to middle-market companies. It aims to raise $2.5 billion in investor equity capital for investment in its first year. This partnership will allow the bank to gain a significant share of the expanding private credit market.
Solid Balance Sheet
PNC benefits from a strong balance sheet position. Total deposits and loans have witnessed a four-year (2019-2023) CAGR of 9.9% and 7.6%, respectively. Although the loan balance declined in the first half of 2024, the deposit balance growth continued in the same period. Capitalizing on growth opportunities, in October 2023, the company acquired loan commitments from Signature Bank worth approximately $16 billion. This is expected to support loan growth in the upcoming quarters. A well-diversified deposit base will further strengthen its financial position. While we project loans and deposit balances to decline marginally and 5%, respectively, in 2024, they will rebound and rise 4.5% and 3% in 2025 and 2026.
Capital Distribution
PNC Financial continues to progress with its capital distribution strategy. In July 2024, it sequentially hiked quarterly cash dividends on common stock by 3.2% to $1.60 per share. Apart from regular dividend hikes, the company also has a share repurchase program in place. A 100-million share repurchase plan was authorized in second-quarter 2022. In the first half of 2024, the company repurchases 1.6 million shares for $0.2 billion. As of Jun 30, 2024, nearly 43% of shares were available for repurchase under the authorization. PNC Financial expects to maintain a similar level of share repurchase activities in the upcoming quarters of 2024. Given the company’s earnings and liquidity strength, its capital-distribution activities seem sustainable and are likely to stoke investors’ confidence in the stock.
Upbeat Q3 Guidance
The company expects average loans to remain stable from the second quarter’s reported figure of $319.9 billion.
Management anticipates NII to rise 1-2% from $3.3 billion reported in second-quarter 2024.
Fee income is expected to rise 1-2% from $1.77 billion reported in the second quarter of 2024.
Other non-interest income is projected to be between $150 million and $200 million compared with $332 million reported in second-quarter 2024.
Finance Stocks Worth a Look
Some better-ranked finance stocks are NatWest Group plc (NWG - Free Report) and BNP Paribas SA (BNPQY - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NatWest Group’s earnings estimates for 2024 have been revised 7.1% upward in the past 30 days. NWG’s shares have gained 49.6% in the past six months.
BNP Paribas’s 2024 earnings estimates have been revised by 1% in the past 30 days. BNPQY’s shares have gained 8.2% in the past six months.