PNC Financial Has A Better Mix Of Drivers In A Sector That's Still Off Its Highs

The bank sector has done a little better since my last update on PNC Financial (NYSE:PNC), but the story remains pretty similar – investors are favoring smaller “Main Street” banks that they believe have better rate leverage, stickier deposits, better prospects for loan growth, and more benign capital requirements. As a more Main Street-type bank than many of its large peers, PNC has continued to outperform, beating the large bank group and the S&P 500 since my last article, but underperforming smaller regional banks.

This is an interesting time to evaluate PNC’s investment prospects. The valuation doesn’t stand out as exceptional relative to many other large banks (not to mention many smaller banks), but I like PNC’s skew to commercial lending and its strong credit quality history. If the economy does better than expected next year, PNC will likely be a laggard, but PNC is a good option for investors who may have a less robust outlook for 2023, but still want some bank exposure. I’d also note that in terms of P/TBV, P/E, and so on, PNC is trading below longer-term averages.

 

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PNC Financial Has A Better Mix Of Drivers In A Sector That's Still Off Its Highs