PNC: A Bank Worth Owning

| About: PNC Financial (PNC)
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It takes an intrepid long-term investor to touch anything in the financial sector these days, given the sector’s dismal performance, constant stream of bad news and concerns about the housing market. However, one stock worth looking at is PNC Financial Services (NYSE:PNC).

“The PNC Financial Services Group, Inc. operates as a diversified financial services company. The company offers retail banking, corporate and institutional banking, asset management, and residential mortgage banking services.” (Business Description from Yahoo Finance.)

Eight reasons PNC is a buy at $51 a share:

  1. PNC has an A rated balance sheet and yields 2.7% after tripling its dividend payout in April.
  2. PNC is selling near the bottom of its five-year valuation range, based on P/E, P/B and P/CF.
  3. It has beat earnings each of the last five quarters. The average beat over consensus during that time span is 22%.
  4. Its trailing PE is a 50% discount to its five-year historical average.
  5. The National City merger is a good fit, and PNC’s quality of earnings is better than its peers.
  6. PNC’s forward P/E of just 8.3 is an over 35% discount to five-year historical average.
  7. Non-performing loans fell over 10% in the second quarter to 2.57% of loans overall, a better figure than peers.
  8. PNC is selling at under analysts’ price targets. S&P has a price target of $65 on PNC, RBC Capital is at $75, and the median analysts’ price target is $63 on PNC.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in PNC over the next 72 hours.