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The financial sector is comprised of companies that offer services broadly aimed at providing loans, insurance, and money management services for individuals and firms. That list of services includes retail and commercial banking, accounting, insurance, asset management, credit cards, and brokerages, among other things. Well-known companies in the sector include Citigroup Inc. (C), Bank of America Corp. (BAC), and Morgan Stanley (MS). The sector, as measured by the Financial Select Sector SPDR ETF (XLF), has slightly lagged the S&P 500’s performance over the last 12 months. XLF posted a 12-month trailing total return of 28.2% versus the S&P’s 31.6% as of January 3.
Below, we’ll examine the top three stocks in the financial sector for best value, fastest earnings growth, and most momentum.
Financial Stocks with the Best Value
Here are the financial stocks in the S&P 500 with the lowest 12-month trailing price-to-earnings (P/E) ratio in the sector. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows investors are paying less for each dollar of profit generated.
- Unum Group: Unum provides disability insurance, group life insurance, and payroll-deducted voluntary benefits for employees primarily at U.S. corporations. According to a December 17 presentation, the company expects core premiums to grow up to 6% in 2020.
- Synchrony Financial: Synchrony Financial is a consumer financial services company offering a range of credit services, including private-label credit cards, small-and-medium-sized business credit products, and installment loans.
- MetLife Inc.: MetLife offers individual insurance products, group insurance, employee benefits, retail banking, and other financial services. On December 5, the company announced the acquisition of PetFirst, which currently administers insurance coverage for more than 40,000 pets.
Financial Stocks with the Fastest Earnings Growth
These are the financial stocks in the S&P 500 with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
|Financial Stocks with the Fastest Earnings Growth|
|Price ($)||Market Cap ($B)||EPS Growth (%)|
|MetLife Inc. (MET)||51.62||47.5||161.4|
|Synchrony Financial (SYF)||36.21||23.4||75.8|
|Willis Towers Watson PLC (WLTW)||204.28||26.3||75.8|
- MetLife Inc.: See above for company description.
- Synchrony Financial: See above for company description.
- Willis Towers Watson PLC: Based in London, Willis Towers Watson provides consulting and brokerage services for a variety of industries. The company recently announced an agreement to acquire PE Corporate Services. a South African management and consultancy advisor. The transaction is expected to close prior to the end of Q1 2020.
Financial Stocks with the Most Momentum
These are the financial stocks in the S&P 500 that had the greatest total return over the past 12 months.
|Financial Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|MSCI Inc. (MSCI)||266.05||22.5||83.2|
|MarketAxess Holdings Inc. (MKTX)||380.25||14.4||83.0|
|Moody’s Corporation (MCO)||241.72||45.6||73.4|
|Financial Select Sector SPDR Fund (XLF)||N/A||N/A||28.2|
- MSCI Inc.: MSCI offers market indexes and analysis to help investors trade securities and manage their portfolios.
- MarketAxess Holdings Inc.: MarketAxess operates an electronic trading platform that enables investment industry professionals to trade corporate bonds and other types of fixed-income instruments.
- Moody’s Corporation: Moody’s specializes in credit ratings, research, and risk analysis for customers in global capital markets.
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