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What to Expect from PNC Financial (PNC) in Q2 Earnings?

The PNC Financial Services Group, Inc. PNC is scheduled to report second-quarter 2017 results on Jul 14, before the opening bell. While revenues and earnings are expected to grow year over year, we can’t conclusively predict and earnings beat.

Before we discuss why an earnings beat might not be in store and what could influence the results, let’s take a look at how the company performed the last quarter.   

PNC Financial witnessed increased revenues in first-quarter of 2017 due to growth in loan and deposits balances, which helped it surpass the Zacks Consensus Estimate. However, the revenue growth was partially offset by higher expenses.

Notably, PNC Financial delivered positive earnings surprises in each of the four trailing quarters, with an impressive average beat of 5%.

Since last earnings report date, shares of PNC Financial have gained 10% marginally outperforming the Zacks categorized Banks - Major Regional industry’s rally of 9.9%.

Will the upcoming earnings release give a boost to PNC Financial’s stock? This depends largely on whether the firm is able to deliver a positive earnings surprise in the second quarter.

However, our proven model doesn’t conclusively point toward an earnings beat this time. Here’s why:

PNC Financial doesn’t have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) — for increasing the chances of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter

Zacks ESP: The Earnings ESP for PNC Financial is 0.00%. This is because the Most Accurate estimate of $2.01 matches the Zacks Consensus Estimate.

Zacks Rank: PNC Financial’s Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings beat.

Factors to Influence Q2 Results

Net Interest Margin and Revenues to Grow: The Fed rate hike of 25 basis points in Mar 2017, is expected to reflect fully in Q2 results and shall help ease some pressure on the margin. Further, the margin might get some support from the Jun rate hike. However, the contraction in the three-month/10-year Treasury spread might offset some benefits.

Management expects its net interest income for the to-be-reported quarter to increase in low-single digits while fee income is expected to grow in mid-single digits.

Expenses to Trend Higher: The company anticipates its non-interest expenses to rise in low-single digits in the second quarter.

Loan Growth: Though the quarter witnessed slow loan growth due to lack of any tangible progress on the regulatory reform front, slight growth in the loan balances can be expected due to the optimism prevailing in the market. Further, management expects loan growth to be modest on a sequential basis.    

PNC Financial’s activities during the quarter were inadequate to win analysts’ confidence. As a result, over the last seven days, the Zacks Consensus Estimate for the quarter’s earnings remained unchanged.

Stocks to Consider

Here are some stocks you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat this quarter.

Comerica Incorporated CMA has an Earnings ESP of +4.67% and a Zacks Rank #2. It is slated to report second-quarter results on Jul 18. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fifth Third Bancorp’s FITB Earnings ESP is +2.38% and it carries a Zacks Rank #3. The company is expected to release second-quarter results on Jul 21.

Huntington Bancshares Incorporated HBAN has an Earnings ESP of +8.70% and a Zacks Rank #3. It is scheduled to report second-quarter results on Jul 21.

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PNC Financial Services Group, Inc. (The) (PNC): Free Stock Analysis Report
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Fifth Third Bancorp (FITB): Free Stock Analysis Report
Huntington Bancshares Incorporated (HBAN): Free Stock Analysis Report
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