I have been a shareholder of PNC for a couple of years now and am looking to increase my holding. I am wondering if someone else has done a DCF or similar valuation as I have a question on how to treat the revaluation of PDP's.
I am specifically referring to the change in value of PDP's on p30 of the annual report. This is a non-cash item so does not affect cashflows. If I treat it similarly to depreciation, then my NPV for company becomes $1.2B and I need to invest alot of money in this extremely undervalued business.
I can only reason that this revaluation is due to unrecoverable debt (so cash used to purchase the debt is effectively written off) otherwise I see no reason why not to add that back to the FCF of the company (the company itself add it back to the operating CF).
So does anyone have any thoughts on how to treat this item?
PNC Price at posting:
$3.33 Sentiment: None Disclosure: Held
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