Momentum investing is all about the idea of following a stock's recent trend, which can be in either direction. In the 'long' context, investors will essentially be "buying high, but hoping to sell even higher." And for investors following this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.
While many investors like to look for momentum in stocks, this can be very tough to define. There is a lot of debate surrounding which metrics are the best to focus on and which are poor quality indicators of future performance. The Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us.
Below, we take a look at The PNC Financial Services Group, Inc (PNC), which currently has a Momentum Style Score of A. We also discuss some of the main drivers of the Momentum Style Score, like price change and earnings estimate revisions.
It's also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. The PNC Financial Services Group, Inc currently has a Zacks Rank of #2 (Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over the following one-month period.
You can see the current list of Zacks #1 Rank Stocks here >>>
Set to Beat the Market?
In order to see if PNC is a promising momentum pick, let's examine some Momentum Style elements to see if this company holds up.
Looking at a stock's short-term price activity is a great way to gauge if it has momentum, since this can reflect both the current interest in a stock and if buyers or sellers have the upper hand at the moment. It's also helpful to compare a security to its industry; this can show investors the best companies in a particular area.
For PNC, shares are up 5.04% over the past week while the Zacks Financial - Investment Bank industry is up 7.51% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 2.81% compares favorably with the industry's 5.6% performance as well.
Considering longer term price metrics, like performance over the last three months or year, can be advantageous as well. Shares of The PNC Financial Services Group, Inc have increased 4.59% over the past quarter, and have gained 32.87% in the last year. On the other hand, the S&P 500 has only moved 2.54% and 25.42%, respectively.
Investors should also take note of PNC's average 20-day trading volume. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above average volume is generally a bullish sign, whereas a declining stock on above average volume is typically bearish. Right now, PNC is averaging 1,666,541 shares for the last 20 days.
Earnings Outlook
The Zacks Momentum Style Score encompasses many things, including estimate revisions and a stock's price movement. Investors should note that earnings estimates are also significant to the Zacks Rank, and a nice path here can be promising. We have recently been noticing this with PNC.
Over the past two months, 8 earnings estimates moved higher compared to 1 lower for the full year. These revisions helped boost PNC's consensus estimate, increasing from $14.73 to $15.20 in the past 60 days. Looking at the next fiscal year, 5 estimates have moved upwards while there have been 2 downward revisions in the same time period.
Bottom Line
Given these factors, it shouldn't be surprising that PNC is a #2 (Buy) stock and boasts a Momentum Score of A. If you're looking for a fresh pick that's set to soar in the near-term, make sure to keep The PNC Financial Services Group, Inc on your short list.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>The PNC Financial Services Group, Inc (PNC) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
