Please ensure Javascript is enabled for purposes of website accessibility

Instant Analysis: PNC Financial Misses on Q1 Revenue, EPS

By Eric Volkman - Apr 19, 2016 at 3:28PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The regional banking group falls just short of top- and bottom-line projections.

What happened?
Shares of PNC Financial Services (PNC 3.32%) have recovered somewhat, after a slight dip following the release of the bank's Q1 results. For the quarter, the company netted $943 million ($1.68 per diluted share), 10% lower on a year-over-year basis. Total revenue slipped by nearly 2% to land at $3.67 billion.

Neither figure met the market's expectations. On average, analysts were projecting $1.75 EPS and $3.75 billion on the top line.


Although PNC described its Q1 as "solid," it did quote CEO William Demchak as saying that the results were negatively affected "by weaker equity markets and related fees, and continued deterioration in energy related credits."

Does it matter?
PNC didn't fall embarrassingly short of analyst expectations, so I don't think the results affect the bank's investing thesis significantly.

What's more of a concern for the market just now is interest rates; it seems the Federal Reserve plans to raise its key rate at a slower pace than previously anticipated. Theoretically, a bank's profit rises when the spread widens between interest-paying liabilities (like deposits) and fresh assets such as loans.

Also weighing down the sector are concerns about the viability of energy companies and projects, which are under threat given persistently weak oil prices. At $2.6 billion, PNC doesn't have huge exposure to this relatively speaking, but it is involved in the sector nevertheless.

Many banks are in the cross-hairs of these concerns, even some that have otherwise been performing very well.

PNC's fellow big, regional lender US Bancorp (USB 2.86%) has also sagged in price so far this year. This, despite a Q4 that saw it notch a new all-time record for quarterly revenue. Like PNC, US Bancorp has relatively insignificant energy exposure (at roughly $3.2 billion in its Q4). Although it's stated that it is not experiencing serious problems with those loans, their mere existence is likely keeping some investors from becoming US Bancorp shareholders. The same dynamic will likely continue to affect PNC's stock price.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The PNC Financial Services Group, Inc. Stock Quote
The PNC Financial Services Group, Inc.
$160.43 (3.32%) $5.16
U.S. Bancorp Stock Quote
U.S. Bancorp
$49.65 (2.86%) $1.38

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.