Yahoo Finance Volatility 101: Should PNC Financial Services Group (NYSE:PNC) Shares Have Dropped 22%?
The simplest way to benefit from a rising market is to buy an index fund. But if you buy individual stocks, you can do both better or worse than that. Unfortunately the The PNC Financial Services Group, Inc. (NYSE:PNC) share price slid 22% over twelve months. That falls noticeably short of the market decline of around 1.5%. At least the damage isn't so bad if you look at the last three years, since the stock is down 13% in that time. The share price has dropped 30% in three months. But this could be related to the weak market, which is down 13% in the same period.
View our latest analysis for PNC Financial Services Group
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Unhappily, PNC Financial Services Group had to report a 1.6% decline in EPS over the last year. This reduction in EPS is not as bad as the 22% share price fall. So it seems the market was too confident about the business, a year ago. The P/E ratio of 9.82 also points to the negative market sentiment.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. Dive deeper into the earnings by checking this interactive graph of PNC Financial Services Group's earnings, revenue and cash flow.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of PNC Financial Services Group, it has a TSR of -19% for the last year. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
While the broader market lost about 1.5% in the twelve months, PNC Financial Services Group shareholders did even worse, losing 19% (even including dividends) . However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. On the bright side, long term shareholders have made money, with a gain of 5.5% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 1 warning sign for PNC Financial Services Group you should be aware of.
PNC Financial Services Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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