PNC Financial Services (PNC) Might Have 20% Upside

In addition, PNC owned around 21% of Blackrock. According to Rogers, excluding Blackrock, PNC was trading at around 8 times expected earnings while the majority of the banks were trading at 10 times – 12 times earnings. If PNC reached 11 times earnings, Rogers thought the share price would reach $70 – $75 per share.

With a current trading price of $12.20, Bank of America is worth more than $131 billion on the market. The market is valuing Bank of America at 9.4 times forward earnings. JP Morgan is quite cheap with only 8.2 times forward earnings. JP Morgan is trading at $49.45 per share, with a total market cap of $188 billion. Among the three, Bank of America is the cheapest with only 0.6 times price/book valuation. The P/B of PNC and JP Morgan are 0.9 times and 1 times, respectively. As the core business of Bank of America generated 1% ROA and 10% ROE, a 60% discount to book value would represent a 16% annual return on investment.

Foolish Bottom Line

PNC, Bank of America and JP Morgan are generating good returns on assets, decent net interest margins, and trading for equal or less than book value. Personally, I think all three giants could be considered long-term investment opportunities for value investors.

The article This Bank Might Have 20% Upside originally appeared on and is written by Anh HOANG.

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