The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
In contrast to all that, many investors prefer to focus on companies like PNC Financial Services Group (NYSE:PNC), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide PNC Financial Services Group with the means to add long-term value to shareholders.
PNC Financial Services Group's Earnings Per Share Are Growing
The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That means EPS growth is considered a real positive by most successful long-term investors. PNC Financial Services Group's shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 47%. While that sort of growth rate isn't sustainable for long, it certainly catches the eye of prospective investors.
Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Not all of PNC Financial Services Group's revenue this year is revenue from operations, so keep in mind the revenue and margin numbers used in this article might not be the best representation of the underlying business. PNC Financial Services Group reported flat revenue and EBIT margins over the last year. While this doesn't ring alarm bells, it may not meet the expectations of growth-minded investors.
You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.
You don't drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for PNC Financial Services Group's future profits.
Are PNC Financial Services Group Insiders Aligned With All Shareholders?
Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
While PNC Financial Services Group insiders did net US$1.2m selling stock over the last year, they invested US$1.4m, a much higher figure. An optimistic sign for those with PNC Financial Services Group in their watchlist. It is also worth noting that it was Chairman William Demchak who made the biggest single purchase, worth US$1.0m, paying US$153 per share.
Along with the insider buying, another encouraging sign for PNC Financial Services Group is that insiders, as a group, have a considerable shareholding. Notably, they have an enviable stake in the company, worth US$181m. We note that this amounts to 0.4% of the company, which may be small owing to the sheer size of PNC Financial Services Group but it's still worth mentioning. This still shows shareholders there is a degree of alignment between management and themselves.
Does PNC Financial Services Group Deserve A Spot On Your Watchlist?
PNC Financial Services Group's earnings per share growth have been climbing higher at an appreciable rate. To make matters even better, the company insiders who know the company best have put their faith in the its future and have been buying more stock. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe PNC Financial Services Group deserves timely attention. It's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with PNC Financial Services Group , and understanding this should be part of your investment process.
The good news is that PNC Financial Services Group is not the only growth stock with insider buying. Here's a list of them... with insider buying in the last three months!
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.