PNC Financial Services (PNC), Wells Fargo & Co (WFC), JPMorgan Chase & Co. (JPM): This Bank is a Good Investment in the Long Run

Wells Fargo & Co (NYSE:WFC), the biggest among the three, is trading at $42.40 per share, with a total market cap of more than $224.40 billion. The market values Wells Fargo & Co (NYSE:WFC) at 10.76 times its forward earnings and 1.5 times its book value. Wells Fargo reported that it had more than 70 million customers in around 9,096 stores, including retail banking, wholesale banking, Wells Fargo Advisors and Mortgage banking. It was considered the number 1 small business lender and auto lender, #1 in mortgage origination in both residential mortgage and commercial mortgage. What might make investors excited is its consistent growth in quarterly EPS, from $0.45 per share in the first quarter 2010 to $0.92 in the first quarter 2013. Its net interest margin came in at 3.48% in Q1 2013. Looking forward, Wells Fargo is expected to have the return on assets of 1.3% to $1.6% and a return on equity of 12%-15%, while the total payout ratio was estimated to stay in the range of 50% to 65%. The bank also increased its cash return to its shareholders by increasing its quarterly dividend to $0.30 per share. Thus, the dividend yield is 2.83%. It also announced that it would buy back a higher amount of shares compared to 2012.

My Foolish take

PNC seems to be a good banking stock to hold in the long run due to its conservative lending practices with commercial lending focus. Moreover, PNC has managed to grow its book value at a good rate even in the crisis period or the “new normal” period. We could expect this trend would continue in the future, delivering the recent return to its shareholders. Investors could also enjoy a sweet dividend yield at 2.3% at its current trading price.

The article This Bank is a Good Investment in the Long Run originally appeared on Fool.com and is written by Anh Hoang.

Anh HOANG has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of JPMorgan Chase & Co (NYSE:JPM)., PNC Financial Services, and Wells Fargo. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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