PNC Bank Adds to Loan Reserves, Profits Drop 39%
PNC Financial Services
reported its third-quarter profit fell 39%, after increasing the amount of funds set aside to cover bad loans.
The company's EPS numbers were 17 cents below what analysts had been expecting. The company also had booked losses of $82 million on the value of commercial mortgage loans held for sale and $74 million on preferred stock in beleaguered mortgage giants
Despite the bank increasing its allowance for loan and lease losses to $1.05 billion from $717 million, the company is continuing to make credit available to customers, as its loans jumped 13% this quarter over the same period last year.
We had removed shares of PNC Bank from our "Recommended" list last week, when shares were trading at $67.75. This earnings report does not make us want to jump back in -- the company's losses were more than we thought they had exposure to. The company does have an attractive dividend yield of 4.28%, based on last night's closing stock price of $61.50. That being said, we are remaining cautious on the shares and would look for better risk/reward situations elsewhere.
PNC Bank is not recommended at this time, holding a Dividend.com Rating of 3.4 out of 5 stars.
Bank of New York Mellon Beats Forecast, Despite 53% Profit Drop
In its latest earnings report,
Bank of New York Mellon
reported EPS of 72 cents, above analysts' average forecast of 69 cents.
The company's growth in securities servicing, which involves providing custodial and other services to institutional investors and is the bank's biggest source of revenue, helped offset $162 million of losses on mortgage and other securities holdings.
As for the topic of "banks lending to each other," management said counter parties have been willing to lend only overnight, but BK, in contrast, is supporting financial institution clients in particular by providing term funding of as long as one month.
We have avoided shares of Bank of New York Mellon since we initiated coverage back in early June, when shares were trading at $41.15. We would still be cautious at this point regarding any investment in Bank of New York Mellon, as well as other financial institutions. The company has a 3.28% dividend yield, based on last night's closing stock price of $29.25.
Bank of NY Mellon is not recommended at this time, holding a Dividend.com Rating of 3.3 out of 5 stars.
Danaher Narrowly Misses Estimates on Higher Revenue, Lower Profit
, manufacturer of bar code readers, medical products and Sears Craftsman tools, reported on Thursday a 23% drop in its quarterly profits.
The company reported revenue was up 17% to $3.21 billion but EPS was 2 cents below what Wall Street had expected. Management pointed to the company's ability to generate $400 million of free cash flow and 13% adjusted EPS growth despite the negative impact of a strengthening U.S. dollar and, hopefully, a high water mark for commodity prices.
Danaher is another company we have avoided since we initiated coverage back in early June, when the stock was trading at $79.19 a share. DHR shares are starting to get cheaper, but the low dividend yield of 0.22% -- based on last night's closing stock price of $54.01 -- is not attractive. We would look elsewhere for better investment opportunities.
Danaher is not recommended at this time, holding a Dividend.com Rating of 3.1 out of 5 stars.
United Technologies Order Rates Slowing, but Revenue Rises
reported a better-than-expected quarter, as the provider of high technology products and services to the global aerospace and building industries saw a boost in helicopter deliveries and products used in commercial construction.
The company's revenue rose 6.9% to $14.8 billion, partly helped by a weaker U.S. currency. That trend is changing as the dollar has gained a fair amount of strength the last month.
The company raised its lower end of its full-year profit forecast by 10 cents and expects earnings of $4.90 to $4.95 per share. Management did see order rates slow in some businesses in the quarter, given the current turmoil.
We have avoided the shares since our early June coverage began, when shares were trading at $67.01. UTX shares are starting to look attractive here at 10 times earnings, but with the order rates slowing, next year's numbers may need to come down further. The company has a decent dividend yield of 3.13%, based on last night's closing stock price of $49.25. We will watch the shares closely and keep investors posted of any potential ratings change.
United Technologies is not recommended at this time, holding a Dividend.com Rating of 3.4 out of 5 stars.
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At the time of publication, the author had no positions in stocks mentioned, although positions may change at any time.
Tom Reese and Paul Rubillo are senior editors of Dividend.com. Visit Dividend.com for more dividend stock ratings, picks, news, and analysis for long-term and income-seeking investors.