Wells Fargo & Co (WFC), Bank of America Corp (BAC), PNC Financial Services (PNC) & Four Financial Stocks to Consider As Housing Bounces Back

Page 2 of 2

PNC Financial Services (NYSE:PNC) built on this performance with its first quarter earnings announcement. The company’s first quarter earnings came in at $1.76 per share, compared to $1.44 during the same quarter of 2012. The Street expected earnings of $1.57 per share. Total revenue was up 6% to $4 billion. Analysts were expecting revenue to drop more than 2% to $3.98 billion.

Below, I will compare these companies with others in the financial sector that may or may not include mortgage services.

I would look to add to JPMorgan Chase & Co. (NYSE:JPM), which just reported first-quarter earnings and is trading at a P/E ratio that is 4 points lower than PNC Financial Services (NYSE:PNC). Although investors weren’t too pleased with JPMorgan Chase & Co. (NYSE:JPM)‘s report, relative to expectations, it was actually pretty good.

JPMorgan Chase & Co. (NYSE:JPM) posted earnings of $1.59 per share and a 33% increase in net income, which arrived at $6.5 billion. Despite the 3% decline in revenue, which arrived at $25.8 billion, JPMorgan Chase & Co. (NYSE:JPM) managed to lower its provision for credit losses by $107 million, or 15%.

The bank was able to gain $126 million from a wider spread of its own credit, which was advantageous to the extent of $0.18 per share in earnings. What’s more, even when this benefit was adjusted out, the bank still would have beaten consensus estimates by 3 cents. This is a well managed brand that should outperform the rest of the year.

Finally, one cannot end the discussion without mentioning the pros and cons of mortgage-backed securities. MBSs are a way for small regional banks or home loan service companies to give mortgages to their customers without having to worry if they have the assets to cover the loan. Instead, the company acts as an intermediary between the homebuyer and the investment markets. While these securities are primarily used to provide safe income, there is also the opportunity to get some capital appreciation as interest rates fall.

Financial stocks have done quite well year-to-date as shares of some of those named here are at or near their 52-week highs. Investors should get into and enjoy the return of the mortgage market.

The article 4 Financial Stocks to Consider As Housing Bounces Back originally appeared on Fool.com and is written by Bill Edson.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Page 2 of 2