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Terex Corp. Message Board

  • jamessmarson3 jamessmarson3 Jan 20, 2013 12:07 PM Flag

    For all the naysayers , Enjoy my PNC Valuation

     

    I think DATA said i never get specific so this is a one time treat for me to show you how much more I know than you guys.

    This is the most specific ill ever get and a one time treat showing you how to value bank earnings.

    PNC's Average assets next year will be $310 B their average liabilities will be 268 B. This implies loan growth of 6% or $10 billion in total.

    Interest income = $10.7 B (310B of average assets X 3.45%
    Interest expense = .-9 B (268 B of average liabilities X 0.336%
    Provisions = .9 B (based on historical average
    Interest income = $7.1 B ( current interest income but minus visa share gain and add back repurchase losses then multiplied by 5% growth during the year)
    Interest expense = -$10 B (PNC said non interest expense to decline 5%)
    Earnings before Taxes $6.0 B
    Tax Rate = 28%
    Earnings after taxes = $4.32 B
    Less NCI and PS = 220 (Non controlling and preferred share dividends
    Earnings = $4.1 B
    EPS = $7.76

    So PNC is trading at 8 times next years and is one of the best banks in the country. If it just normalizes to a WFC, USB or BBT PE the stock is worth $90. I think its worth at least $100 since WFC and USB are also undervalued.

    Here is to 2013! the year of PNC!

    Notes

    There interest income / all assets will be 3.45% next year which is this year interest income / all assets * 90% to reflect that their yields decline in this low rate environment

    The interest expense / all liabilities will be 0.336% which will decline by about 10% from last year based on the fact their deposits and other liabilities are beign repriced lower

    This topic is deleted.
 
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