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10 Big Bank Stocks Gearing Up for Third-Quarter Earnings (Update 3)

3. PNC Financial Services Group
Shares of PNC Financial Services Group (PNC) of Pittsburgh closed at $63.83, returning 11.5% year-to-date, following a 3% decline during 2011.

The shares trade for 1.3 times tangible book value, and for 9.3 times the consensus 2013 EPS estimate of $6.83. The consensus 2012 EPS estimate is $5.68.

Based on a quarterly payout of 40 cents, the shares have a dividend yield of 2.51%.

For the 12 month period ended June 30, PNC's ROA was 0.92%, while the company's ROE was 6.87%.

The consensus among analysts is for PNC to report a third-quarter profit of $1.59, increasing from 98 cents during the second quarter (when the company booked extraordinary charges of 54 cents a share for mortgage putback reserves 16 cents for trust preferred share redemptions an six cents for restructuring), and $1.55, during the third quarter of 2011.

Juneja rates PNC "Overweight," with an $80 price target, saying on Friday that his rating reflects the company's "attractive valuation and multiple drivers of revenue growth."

"PNC is expanding its business through recent acquisitions of [National City, at the end of 2008] and RBC's US bank franchise [during the first quarter] and actively growing fee based businesses including capital markets and treasury management as well as consumer businesses such as credit cards," he said, adding that the stock "is trading at 1.4x tangible book, a tad above overall regional banks but should be trading closer to high quality banks given its track record of good revenue growth and conservative risk profile."

Deutsche Bank analyst Matt O'Connor on Tuesday upgraded PNC to a "Buy" rating from a "Hold" rating, saying that the shares "have underperformed the S&P Commercial Bank Index (by 300bps over the past 3-months and 1700bps YTD)," reflecting "1) uncertainty related to purchase accounting accretion; 2) lack of clarity on Basel 3 capital; and 3) noisy earnings given a number of one-time hits."

O'Connor believes all of these issues "have been/will be addressed soon," as the company's management "recently gave clarity on the path for purchase accounting accretion from here," and because "we expect to get more clarity on the path to achieving 8-8.5% by the end of 2013."

O'Connor raised his 2012 EPS estimate for PNC by 20 cents to $6.10, and his 2013 estimate 24 cents to $6.69.

PNC Chart PNC data by YCharts

Interested in more on PNC Financial Services Group? See TheStreet Ratings' report card for this stock.
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