Although PNC Financial Services Group (currently trading at $183.70 per share) has gained 12.3% over the last six months, it has trailed the S&P 500’s 21.3% return during that period. This may have investors wondering how to approach the situation.

Given the relatively weaker price action, is now a good time to buy PNC? Or are investors better off allocating their money elsewhere?

Why Does PNC Financial Services Group Spark Debate?

Tracing its roots back to 1852 when Pittsburgh's industrial boom demanded stronger financial institutions, PNC (NYSE: PNC) is a diversified financial institution that provides retail banking, corporate banking, and asset management services through a coast-to-coast branch network.

Two Positive Attributes:

1. Outstanding Long-Term EPS Growth

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

PNC Financial Services Group’s EPS grew at an astounding 21% compounded annual growth rate over the last five years, higher than its 5.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

2. Growing TBVPS Reflects Strong Asset Base

For banks, tangible book value per share (TBVPS) is a crucial metric that measures the actual value of shareholders’ equity, stripping out goodwill and other intangible assets that may not be recoverable in a worst-case scenario.

PNC Financial Services Group’s TBVPS increased by 9.5% annually over the last five years, and growth has recently accelerated as TBVPS grew at an incredible 38.5% annual clip over the past two years (from $78.40 to $150.48 per share).

One Reason to be Careful:

Net Interest Income Points to Soft Demand

Net interest income commands greater market attention due to its reliability and consistency, whereas one-time fees are often seen as lower-quality revenue that lacks the same dependable characteristics.

PNC Financial Services Group’s net interest income has grown at a 7.3% annualized rate over the last five years, slightly worse than the broader banking industry. Its growth was driven by both an increase in its outstanding loans and net interest margin, which represents how much a bank earns in relation to its outstanding loan book.

Final Judgment

PNC Financial Services Group has huge potential even though it has some open questions. With its shares lagging the market recently, the stock trades at 1.3× forward P/B (or $183.70 per share). Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .

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