In this series, we are going to value the common equity shares of Wells Fargo (WFC), U.S. Bancorp (USB) and PNC Financial (PNC). In this article, we'll examine the recent financial performance, and the effectiveness of management. In the previous article, we examined the financial performance, the market share relationship, and the effectiveness of management.
The total asset of all three firms increased in the first half of the year compared to the end of 2011.
The total equity of all three firms increased in the first half of 2012 compared to the end of 2011.
In the first half of the year, Well Fargo and U.S. Bancorp's profit margins increased. PNC's profit margin declined from 30 percent to 25 percent. U.S. Bancorp's profit margin in the first half of the year was 43 percent and Well Fargo's was 36 percent.
The financial leverage of all three firms increased in the first half of 2012 compared to the end of 2011. We'll see if the higher financial leverages result in increased net income.
Return on assets remained at low levels. That said, U.S. Bancorp had the highest return on assets.
Well Fargo's and U.S. Bancorp's return on equity remained solid in the first half of the year. PNC is having difficulty generating returns on equity this year.
The market shares remained relatively stable in the first half of the year. However, U.S. Bancorp's market share improved by 100 basis points.
On a relative basis, based on the data presented above U.S. Bancorp is the best performing firm. I'm reaching that conclusion based on the return on equity and assets, as well as, the net profit margin and use of financial leverage.
To be continued...
Disclaimer: This article is not meant to establish or continue an investment advisory relationship. Before investing, readers should consult their financial advisor. Christopher Grosvenor does not know your financial situation and ability to bear risk and thus his opinions may not be suitable for all investors.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.