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Terex Corporation Message Board

  • jamessmarson3 jamessmarson3 Jan 16, 2014 12:14 PM Flag

    PNC just popped off

    JK, its a result I was expecting. It is good to see America's most undervalued bank rise further along with COF.

    PNC and COF earn excellent returns on equity yet both trade at under 10 times earnings. While all other banks trade at 12+ BBT somehow gets a $13. BAC is getting a high one getting like 12 times normalized earnings.

    USB is also quite high since investors misread their results. At any given point in time USB appears more attractive than all other banks by looking at simple banking metrics. However when you dig deeper you realize they are not.

    USB doesn't grow they would rather have ROE of 20% than have ROE of 18% and increase intrinsic value and have more net income. So they are a bank that clearly refuses business etc in order to keep their current business.

    Anyways PNC and COF still great investment in 2014, they were great in 2013. BUt at some point I will need a few more new ideas as I can't count on their stock being 40% undervalued forever.

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    • See USB reported today they have all the best metrics but they only grew earnings 5% this year despite have a 15% ROE. It shows they don't try to grow and they manage for metrics. ERGO their high PE relative to the sector is undeserved.

      A company paying 0 dividends that can have an ROE of 11% on equity is more attractive at a company with an ROE of 15% paying 100%. SInce over time the 11% gets compunded while 15% stays the same every year. That is USB but investors haven't realized this in 13 years making it the darling of the financial markets.

 
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