Top Financial Stocks for March 2020

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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 financial sector service companies includes retail and commercial banking, accounting, insurance, asset management, credit cards, and brokerages. 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 trailed the S&P 500’s performance over the last 12 months. XLF posted a 12-month trailing total return of 17.9% versus the S&P’s 22.6%. These market performance numbers and the statistics in the tables below are as of February 21.

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.

Financial Stocks with the Best Value
  Price ($) Market Cap ($B) 12-Month Trailing P/E Ratio
Unum Group (UNM) 30.12 6.1 5.7
Synchrony Financial (SYF 33.64 20.6 6.1
Comerica Inc. (CMA) 63.43 9.0 8.1
  • Unum Group: Unum provides disability insurance, group life insurance, and payroll-deducted voluntary benefits for employees primarily at U.S. corporations. According to the Q4 2019 earnings report, released on February 4, Unum reported net income of $296.2 million in the previous quarter, up 18.9% year-over-year (YOY).
  • 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. In Q4 2019, Synchrony announced a partnership with Verizon Communications, Inc. which will make Synchrony the exclusive issuer of a co-branded Verizon credit card, slated for release in 2020.
  • Comerica Inc.: Comerica is a bank offering online, investment, mortgage, and other financial services in North America. Per the company’s Q4 2019 earnings release from January 21, Comerica reported net income of $1.2 billion, or $7.87 per share, last year. This marks an increase in annual earnings per share of 9% YOY.

Financial Stocks with the Fastest Earnings Growth

These are the financial stocks in the S&P 500 with the highest 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 (%)
Assurant Inc. (AIZ) 141.57 8.5 518.8
Progressive Corp. (PGR) 80.84 47.3 313.6
Chubb Ltd. (CB) 163.15 73.7 238.5
  • Assurant Inc.: Assurant provides a variety of extended service contracts, vehicle protection services, and insurance products. The company serves customers around the world.
  • Progressive Corp.: Progressive is an insurance holding company that provides various personal, automotive, and special property-casualty insurance products through its subsidiaries. On February 14, Progressive announced a common share dividend of $0.10 per share, payable on April 15.
  • Chubb Ltd.: Chubb is an insurance company offering personal and commercial insurance products in a variety of areas. In Q4 2019, Chubb reported net income per share of $2.57, up nearly 2.5 times the same period for the prior year.

Financial Stocks with the Most Momentum

These are the financial stocks in the S&P 500 that had the highest 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 321.71 27.3 85.2
Moody’s Corp. (MCO) 278.87 52.3 66.2
Mastercard Inc. (MA) 344.45 346.2 56.6
S&P 500 N/A N/A 22.6
Financial Select Sector SPDR Fund (XLF) N/A N/A 17.9
  • MSCI Inc.: MSCI offers market indexes and analysis to help investors trade securities and manage their portfolios. On January 30, MSCI published its Q4 2019 financial results, including news that the company posted a 12.4% increase in quarterly operating revenue.
  • Moody’s Corp.: Moody’s specializes in credit ratings, research, and risk analysis for customers in global capital markets.
  • Mastercard Inc.: Mastercard is a financial payments service provider. Best known for its namesake credit and debit cards, the company also offers processing services for ATMs and other forms of payment. The company recently announced a quarterly cash dividend of $0.40 per share, to be paid on May 8, 2020.

Source: Investopedia

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