PNCPNC's shares closed at $62.16 Wednesday, returning 10% year-to-date, following a 3% decline during 2011. The shares trade for nine times the consensus 2013 earnings estimate of $6.82 a share, among analyst polled by Thomson Reuters. Based on a 40-cent quarterly payout, PNC's shares have a dividend yield of 2.57%. PNC's operating returns on average equity (ROE) over the past five quarters have ranged between 5.44% and 10.62%, according to Thomson Reuters Bank Insight. Staite estimates that in 2013, the company's return on tangible equity will be 14.6%, and that excluding the company's 22% stake in BlackRock ( BLK), 2013 EPS will be is $6.50. Staite rates PNC "Overweight," with a $76 price target, saying the shares are "cheap," at 1.3 times tangible book value, compared to a price-to-tangible-book ratio of 2.6 for U.S. Bancorp, "even accounting for differences in business mix and profitability. The analyst's price target "implies a P/TB of 1.6x and is composed of $63/share for the core banking business plus $13 for the 22% stake in BlackRock." While PNC's "valuation has been dented" by its mortgage putback charges in the second quarter, Staite said "we think it will recover."
Wells FargoWells Fargo's shares closed at $34.18 Wednesday, returning 27% year-to-date, following a 10% decline during 2011. The shares trade for nine times the consensus 2013 EPS estimate of $3.67. Based on a 22-cent quarterly payout, the shares have a dividend yield of 2.57%. The company's operating returns on average equity (ROE) over the past five quarters have ranged between 11.51% and 12.37%. Staite estimates that in 2013, Wells Fargo will achieve a return on tangible equity of 16.7% and earn $3.79 a share, with its dividend yield increasing to 3.4%. The analyst rates Wells Fargo "Overweight," with a $40 price target, and said the shares were "attractively valued on a P/TB of 1.6x," and that the price-to-tangible-book ratio could move up to 1.8. Staite said that Wells Fargo's return on tangible equity "is currently running at 16% and should remain at this level with potentially weaker mortgages revenues in 2013 being offset by cost savings," but that "medium to longer term we think 18% is attainable." Please see TheStreet's earnings coverage for details on Wells Fargo's second-quarter performance. Interested in more on Wells Fargo? See TheStreet Ratings' report card for this stock.
U.S. BancorpShares of U.S. Bancorp closed at $32.90 Wednesday, returning 24% year-to-date, following a 2% return during 2011. The shares trade for 11 times the consensus 2013 EPS estimate of $3.04. Based on a quarterly payout of 19.5 cents, the shares have a dividend yield of 2.37%. USB's operating returns on average equity (ROE) over the past five quarters have ranged between 14.65% and 16.44%. Staite estimates that in 2013, the company's return on tangible will be 22.5%, with EPS of $3.02, and a dividend yield increasing to 2.5%.
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