Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide.
After a strong three-year run that has seen PNC Financial Services Group return 129.4%, the stock now trades near US$241.62, while the Excess Returns intrinsic value estimate still indicates a meaningful gap between price and estimated worth.
Over the last three years, PNC Financial Services Group has returned 129.4%, which puts extra focus on whether recent gains already reflect its fundamentals.
For a large bank, valuation can be heavily influenced by how investors view its long-term profitability and credit costs, so any shift in margins or loan quality may quickly change what looks reasonable today.
On Simply Wall St's checks, PNC Financial Services Group screens as undervalued on 4 of 6 measures. This is a mixed picture rather than a clear bargain or clear overvaluation, which you can see in more detail in the 4 out of 6 valuation score.
The issue now is whether the current share price already reflects that intrinsic value estimate or if the gap still leaves a meaningful margin for investors.
PNC Financial Services Group delivered 28.6% returns over the last year. See how this stacks up to the rest of the Banks industry.
The Excess Returns model evaluates how much profit PNC Financial Services Group can generate over its cost of equity, based on expected returns on its book value.
For PNC Financial Services Group, the model uses a Book Value of $145.51 per share and a Stable EPS estimate of $21.67 per share, based on weighted future Return on Equity estimates from 14 analysts. The Average Return on Equity is 13.70%, compared with a Cost of Equity of $12.09 per share. This implies an Excess Return of $9.57 per share on a Stable Book Value of $158.17 per share, sourced from 9 analyst estimates.
When these excess returns are projected forward and discounted, the Excess Returns model points to an intrinsic value of about $400.72 per share. Compared with the current share price near $241.62, this implies a 39.7% intrinsic discount, which indicates that the stock price may not fully reflect the earnings power implied by these assumptions.
On this Excess Returns view, PNC Financial Services Group stock currently appears undervalued relative to its estimated intrinsic value.
Our Excess Returns analysis suggests PNC Financial Services Group is undervalued by 39.7%. Track this in your watchlist or portfolio, or discover 50 more high quality undervalued stocks.
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for PNC Financial Services Group.
P/E is often a straightforward way to compare banks, and PNC Financial Services Group is no exception, since earnings already factor in credit costs and interest margins.
Right now PNC trades on about 13.3x earnings, compared with an average P/E of 11.8x for the wider Banks industry and a peer group average of 14.9x. A fair P/E for PNC, based on its size, profitability profile and risks, is estimated at around 14.7x. That is modestly above the current multiple, so the stock does not screen as either especially cheap or especially expensive on this framework.
The gap between the actual P/E and this fair ratio is not large, which suggests the market may already be pricing PNC Financial Services Group close to what the model indicates as reasonable for its earnings power.
On the P/E multiple, PNC Financial Services Group stock currently appears roughly fairly valued compared with its banking peers and its modelled fair ratio.
See what the numbers say about this price — find out in our valuation breakdown.
Simply Wall St Narratives for PNC Financial Services Group pick up where this valuation puzzle leaves off by spelling out what would need to happen to the company's future growth, margins and earnings for the stock to be worth materially more or less than today's price on its Community page. Rather than relying on a single multiple or model output, each one lays out the assumptions behind its view of fair value so you can compare them with actual results over time.
You can add your own narrative on PNC Financial Services Group's growth, margins and execution, and be one of the first voices in the Simply Wall St community to put a clear, number-driven case on the stock. Share your thesis today and see how it compares as new information emerges over time.
Do you think there's more to the story for PNC Financial Services Group? Head over to our Community to see what others are saying!
For PNC Financial Services Group, the Excess Returns intrinsic value estimate points to a sizeable discount, while the P/E view suggests the stock is priced close to what peers and the market currently assume. The mixed broader valuation checks support a balanced read rather than a clear bargain or clear warning. The real debate from here is whether PNC can sustain the earnings strength implied in the intrinsic value model, or whether the current multiple already captures a more cautious outlook on profitability and risk.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include PNC.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]