PNC Financial Services Group Inc Stock Buy Recommendation Reiterated (PNC)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- PNC Financial Services Group (NYSE: PNC) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

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Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 30.5%. Since the same quarter one year prior, revenues rose by 11.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Commercial Banks industry average. The net income increased by 13.1% when compared to the same quarter one year prior, going from $830.00 million to $939.00 million.
  • Net operating cash flow has significantly increased by 105.90% to $1,812.00 million when compared to the same quarter last year. In addition, PNC FINANCIAL SVCS GROUP INC has also vastly surpassed the industry average cash flow growth rate of -6.81%.
  • The gross profit margin for PNC FINANCIAL SVCS GROUP INC is currently very high, coming in at 88.60%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 21.50% trails the industry average.
  • After a year of stock price fluctuations, the net result is that PNC's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

The PNC Financial Services Group, Inc. operates as a diversified financial services company in the United States and internationally. The company's Retail Banking segment provides deposit, lending, brokerage, investment management, and cash management services. PNC Financial Services Group has a market cap of $29.96 billion and is part of the financial sector and banking industry. The company has a P/E ratio of 9.7, below the S&P 500 P/E ratio of 17.7. Shares are down 2.5% year to date as of the close of trading on Thursday.

You can view the full PNC Financial Services Group Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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