PNC (PNC Financial Services Group) Predictability Rank

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What is PNC Financial Services Group Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

PNC Financial Services Group Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

PNC Financial Services Group Predictability Rank Related Terms

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PNC Financial Services Group Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » PNC Financial Services Group Inc (NYSE:PNC) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

PNC:Mexico 0KEF:UK PNP:Germany PNP:Germany PNCS34:Brazil

Address

300 Fifth Avenue, The Tower at PNC Plaza, Pittsburgh, PA, USA, 15222-2401

Website

https://www.pnc.com

PNC Financial Services Group is a diversified financial services company offering retail banking, corporate and institutional banking, asset management, and residential mortgage banking across the United States.

Executives

William S Demchak	officer: Vice Chairman and CFO	THE TOWER AT PNC PLAZA, 300 FIFTH AVENUE, PITTSBURGH PA 15222-2707
Stacy M. Juchno	officer: Executive Vice President	249 FIFTH AVENUE, MAILSTOP: P1-POPP-25-3, PITTSBURGH PA 15222-2707
Andrew T Feldstein	director	280 PARK AVENUE, 5TH FLOOR EAST, NEW YORK NY 10017
Martin Pfinsgraff	director	354 KINGSBERRY DRIVE, ANNAPOLIS MD 21409
Michael P. Lyons	officer: Executive Vice President	249 FIFTH AVENUE, 1PNC, PITTSBURGH PA 15222
Richard Kevin Bynum	officer: Executive Vice President	7567 GLEN POINTE CT., SPRINGFIELD VA 22153
Michael J Hannon	officer: Chief Credit Policy Officer	249 FIFTH AVE, P1-POPP-30-1, PITTSBURGH PA 15222
Guild Deborah	officer: Executive Vice President	847 PERSIMMON ROAD, SEWICKLEY PA 15143
Bryan Scott Salesky	director	2545 RAILROAD ST, SUITE 400, PITTSBURGH PA 15222
Joseph Alvarado	director	705 N. BAR Y ROAD, P.O. BOX 11368, JACKSON WY 83002
Kieran John Fallon	officer: Executive Vice President	17160 SPRING CREEK LANE, LEESBURG VA 20176
Overstrom Alexander E. C.	officer: Executive Vice President	643 PITCAIRN PLACE, PITTSBURGH PA 15232
Renu Khator	director	11 GREENWAY PLAZA, SUITE 2400, HOUSTON TX 77046
Robert A Niblock	director	1605 CURTIS BRIDGE ROAD, WILKESBORO NC 28697
Karen L. Larrimer	officer: Executive Vice President	ONE PNC PLAZA, 249 FIFTH AVENUE, PITTSBURGH PA 15222-2707