3 Predictions for PNC Stock

Among America's bigger regional bankers, PNC stock can probably claim claim its priciness as its biggest distinguishing factor. Valued at 12.7 times trailing earnings, shares of PNC Financial Services cost 18% more than rival Regions Financial , and a whopping 53% more than SunTrust Banks . But is there a good reason for investors to pay up for PNC stock?

That's what we're going to try to find out today, as we examine a couple of predictions Wall Street analysts are making about the stock ... and then turn to a prediction of my own.

Prediction No. 1: Superior sales
Wall Street analysts see PNC's revenues growing to about $16.5 billion by 2015. That's about 6.3% revenue growth -- total -- across three years' time.

While that may not sound like much, it's significantly sprightlier than the expectations for either SunTrust (1.4%) or Regions (3.5%). That's particularly significant, given that PNC is already so much larger than its rivals, and might ordinarily be expected to have trouble making its already big revenue stream ... even bigger.

Projected Revenues (in Millions)

Prediction No. 2: Premium profits
PNC's not just growing revenues, either. It's earning profits on them -- and fatter profits than either of its rivals, both on a per-share basis, and also from the perspective of how fast PNC stock is increasing its earnings.

Over the next few years, analysts see PNC growing per-share earnings by more than 43% in total. That's as compared to Regions' growth, of just a bit more than 31%. Meanwhile, SunTrust's earnings are expected to decline sharply from 2012 levels this year, and not make up the ground they've lost till 2016 at the earliest.

Projected Earnings Per Share

Prediction No. 3: Steady as she goes
Yet assuming the analysts' projections pan out, this all suggests that PNC stock -- and the investors who own it -- can expect only modest gains in the years to come. Priced at 12.7 times earnings, PNC doesn't look unreasonably expensive in light of the bank's superior 2.5% dividend yield (a full point more than either Regions or SunTrust pay), and its modest, achievable 8.4% five-year rate of earnings growth.

Yet the stock's no bargain, with the expected 11%-ish return to shareholders. This may explain why, over the past year, PNC stock has basically paced the S&P 500's returns with a 22% rise in value -- whereas both Regions and SunTrust have outperformed both PNC, and the S&P, quite handily. That's a trend that should continue, especially given that both Regions and SunTrust currently trade for about 0.8 times book value, while PNC costs a bit more than book.

Indeed, if you ask me, the best bargain in this group probably is SunTrust. Analysts see SunTrust's weak earnings this year setting up the bank for strong profits growth -- 10% annually -- over the next half-decade. With an 8.3 P/E ratio, and a decent 1.3% dividend yield, that makes SunTrust stock a better deal than PNC stock.