The PNC Financial Services Group, Inc.’s PNC strategic initiatives and revenue growth look impressive. Decent liquidity aids steady capital distributions, increasing investor confidence in the stock.
The company has also been witnessing upward estimate revisions, reflecting analysts’ optimism about its prospects. Over the last 30 days, the Zacks Consensus Estimate for 2025 and 2026 moved upward.
Estimate Revision Trend
Image Source: Zacks Investment Research
Shares of this Zacks Rank #2 (Buy) company gained 37.1% over the past year compared with 57% growth recorded by the industry.
Price Performance
Image Source: Zacks Investment Research
Notably, PNC Financial has a number of other aspects that make it an attractive investment option.
Here’s Why PNC Financial is an Attractive Buy
Revenue Growth: PNC continues to make steady progress toward improving its top line. The company's fee income has grown, seeing a six-year CAGR (2018-2024) of 1.4%. Net interest income (NII) witnessed a CAGR of 5.6% over the past six years ended 2024. The company expects its NII to benefit from fixed asset repricing over the next couple of years.
For 2025, management expects NII to increase 6-7% year over year and fee income to rise 5% from the year-ago reported figure.
The company’s projected sales growth (F1/F0) of 6% compared with the S&P 500 average growth rate of 4.5% indicates constant upward momentum in revenues.
Earnings Strength: Earnings are anticipated to display an upswing in the near term, as the company’s projected EPS growth (F1/F0) is 9.92% compared with the S&P 500 average rate of 8.15%. Also, PNC Financial surpassed estimates in the trailing four quarters and recorded an average positive earnings surprise of 9.77%.
Strategic Initiatives: In a move to strengthen its domestic presence, PNC Financial is set to expand its branch network across the United States. In February 2024, the company announced its plans to invest $1 billion to enhance its coast-to-coast branch network by opening more than 100 locations in key cities, such as Austin, Dallas, Denver, Houston, Miami and San Antonio.
Additionally, the bank aims to renovate more than 1,200 existing branches to strengthen its presence in current markets. This will enhance accessibility and convenience for its customers.
In November 2024, the company announced plans to increase its branch investment by $500 million and bring the total investment to $1.5 billion to open more than 200 branches across 12 U.S. cities and renovate 1,400 existing locations over the next five years.
By concentrating on key growth markets, particularly in the Southwest, PNC Financial has witnessed significant success in expanding its customer base and increasing the number of checking accounts in 2024. With the addition of these branches, it will solidify its position as one of the largest retail banks in the United States.
Solid Liquidity Position: PNC Financial enjoys a decent liquidity position. As of Dec. 31, 2024, its total available liquidity (comprising cash and due from banks as well as interest-earning deposits in banks) was $41.2 billion, which increased sequentially. While the company had total borrowed funds of $61.7 billion as of the same date, it declined from the previous quarter.
The bank’s senior debt enjoyed investment-grade credit ratings of A-, A and A3 from Standard & Poor’s, Fitch and Moody’s, respectively. This will enable the company to access the debt market at favorable rates. Hence, we believe that PNC Financial will be able to meet its debt obligations in the near term, even if the economic situation worsens.
Impressive Capital Distribution: PNC 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.
Over the past five years, the company has increased its dividend four times, with an annualized dividend growth rate of 9.1%. It currently has a payout ratio of 46%.
Apart from regular dividend hikes, PNC Financial has a share repurchase program in place. A 100-million share repurchase plan was authorized in the second quarter of 2022. In 2024, the company repurchased 0.5 billion of its common shares under its share repurchase program.
Given PNC’s earnings and liquidity strength, its capital-distribution activities seem sustainable and are likely to stoke investors’ confidence in the stock.
Other Stocks to Consider
Some other top-ranked stocks in the same space are Citigroup C and JP Morgan JPM, each flaunting a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Citigroup’s earnings estimates have been unchanged at $7.53 per share over the past 30 days. C’s share price has increased 42% over the past six months.
JPM’s earnings estimates have been unchanged at $18.10 per share over the past 30 days. Its share price has increased 30.3% over the past six months.
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Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
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The PNC Financial Services Group, Inc (PNC) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
