The PNC Financial Services Group, Inc. (PNC) is all set to unveil its fiscal 2024 first-quarter earnings on April 16, 2024. Analysts predict a 6.5% year-over-year drop in its first quarter topline figure, reaching $5.24 billion, while its earnings per share of $3.08 reflects a 22.5% year-over-year decline.
Despite exceeding analyst estimates for the fourth quarter, the company’s fourth-quarter performance was less-than-stellar. The bank’s bottom-line figures suffered a major blow primarily because of charges from regulators and layoff expenses.
PNC disclosed that it allocated approximately $515 million during the fourth quarter for a Federal Deposit Insurance Corp. (FDIC) special assessment targeting major financial institutions linked to the collapse of Silicon Valley Bank (SVB) and Signature Bank in early 2023.
Additionally, the bank incurred $150 million in charges due to ongoing reductions in its workforce, which began last year in October.
On top of it, the company issued a subdued first quarter and fiscal year 2024 guidance. Management anticipates a 2% decrease in the fiscal year 2024 total revenue compared to the fiscal year 2023, with net interest income expected to decline by 4% to 6% from the previous year.
Meanwhile, first-quarter total revenue is expected to experience a sequential decline of 3% to 4%, while net interest income is projected to decrease by 2% to 3% from the fourth quarter.
PNC’s shares have plunged 2.7% year-to-date to close the last trading session at $150.63.
Here are the fundamental aspects of PNC that could influence its performance in the near term:
Weak Financials
For the fiscal fourth quarter that ended on December 31, 2023, PNC’s total revenue dropped 7.6% year-over-year to $5.36 billion. Its non-interest income plunged 5.8% from the prior-year quarter to $1.96 billion.
Meanwhile, its net interest income declined 7.6% year-over-year to $3.40 billion. Moreover, the company’s adjusted net income and adjusted EPS came in at $1.27 billion and $3.16, down 9.6% and 8.9% from the year-ago value, respectively.
Downbeat Analyst Estimates
The consensus revenue estimate of $21.39 billion for the fiscal year ending December 2024 represents a marginal year-over-year decline. Likewise, the consensus EPS estimate of $12.37 for the same period reflects a 12.3% year-over-year plunge.
Stretched Valuation
In terms of forward non-GAAP P/E, PNC is trading at 12.18x, 21.7% higher than the industry average of 10.01x. Likewise, its forward Price/Book ratio of 1.24x is 22.9% higher than the industry average of 1.01x. Furthermore, the stock’s forward Price/Sales multiple of 2.80 is 15.8% higher than the 2.42x industry average.
POWR Ratings Exhibit Bleak Prospects
PNC’s grim fundamentals are reflected in its POWR Ratings. The stock has an overall rating of D, translating to a Sell in our proprietary rating system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. PNC has a D grade for Growth, consistent with its weak growth in its latest quarterly results. Likewise, the stock’s D grade for Value is justified by its higher-than-industry valuation metrics.
Within the Money Center Banks industry, PNC is ranked #8 out of the nine stocks.
Beyond what we’ve stated above, we have also rated the stock for Momentum, Stability, Sentiment, and Quality. Get all PNC’s ratings here.
Bottom Line
PNC is navigating a tough landscape marked by hefty regulatory charges and layoffs. Furthermore, considering the company’s weak financial outlook, disappointing fourth-quarter performance, and negative analyst sentiment, the stock appears to be highly-priced, evident from its stretched valuation metrics. With these factors in mind, it might be best for investors to steer clear of PNC at this juncture.
How Does The PNC Financial Services Group, Inc. (PNC) Stack Up Against Its Peers?
While PNC has an overall grade of D, equating to a Sell rating, you may also check out these other stocks within the Foreign Banks industry: Banco Macro S.A. (BMA), Banco Santander, S.A. (SAN), and Nedbank Group Limited (NDBKY), carrying A (Strong Buy) and B (Buy) ratings. To explore more Foreign Banks stocks, click here.
What To Do Next?
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PNC shares rose $1.06 (+0.70%) in premarket trading Monday. Year-to-date, PNC has declined 0.00%, versus a 8.69% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Mukherjee
Anushka's ultimate aim is to equip investors with essential knowledge that empowers them to make well-informed investment choices and attain sustained financial prosperity in the long run.
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