The financial sector is comprised of companies that offer services including loans, savings, insurance, payment services, and money management for individuals and firms. Financial sector stocks include a wide range of companies involved in retail and commercial banking, accounting, insurance, asset management, credit cards, and brokerage. Well-known companies in the sector include Wells Fargo Co. (WFC), Goldman Sachs Group Inc. (GS), and Morgan Stanley (MS).
Financial stocks, as represented by the Financial Select Sector SPDR ETF (XLF), have outperformed the broader market, providing investors with a total return of 83.3% compared to the Russell 1000's total return of 79.4% over the past 12 months. These market performance numbers and all statistics in the value and momentum tables below are as of March 22, 2021. The statistics in the growth table are as of March 23, 2021.
Here are the top 3 financial stocks with the best value, the fastest growth, and the most momentum.
These are the financial stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
|Best Value Financial Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|White Mountains Insurance Group Ltd. ( WTM)||1171.81||3.6||5.1|
|Virtu Financial Inc. ( VIRT)||30.21||5.8||5.8|
|American National Group Inc. ( ANAT)||109.07||2.9||6.3|
- White Mountains Insurance Group Ltd.: White Mountains Insurance Group is a holding company whose subsidiaries provide insurance services. It offers property and casualty insurance and reinsurance products. The company announced in early February financial results for its 2020 fiscal year (FY), which ended Dec. 31, 2020. Annual net income rose 76.2% as total revenue for the year grew 32.2%. Total expenses grew at a much slower pace than revenue, helping to boost net income.
- Virtu Financial Inc.: Virtu Financial is a financial services company that acts as a market maker. It provides liquidity, execution services and data, analytics, and other services.
- American National Group Inc.: American National Group is an insurance company that offers life, house, business, health, auto, renters, and farm insurance services. It also offers annuities. The company announced in early March financial results for FY 2020, which ended Dec. 31, 2020. Net income fell 25.8% as total premiums and revenue declined 6.8%. American National said that its costs related to reinsurance of coverage for deaths due to COVID-19 have increased. The primary reason for the fall in net income was due to a $116.7 million reduction in after-tax net realized investment gains and a $52.3 million reduction in after-tax net gains on equity securities.
These are the top financial stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
|Fastest Growing Financial Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|White Mountains Insurance Group Ltd. (WTM)||1169.98||3.6||724.8||197.1|
|Rocket Cos. Inc. ( RKT)||23.04||45.7||293.6||143.9|
|RenaissanceRe Holdings Ltd. ( RNR)||162.18||8.2||385.7||27.1|
- White Mountains Insurance Group Ltd.: See above for company description.
- Rocket Cos. Inc.: Rocket offers financial services related to homeownership and other personal transactions. Rocket helps customers obtain mortgages, personal and car loans, and other personal financial services. Rocket Mortgage is their flagship business.
- RenaissanceReHoldings Ltd.: RenaissanceRe provides reinsurance for property, casualty, and specialty insurance policies. It also provides some insurance mostly through intermediary companies. It released Q4 2020 financial results on Jan. 26, 2021 and reported an operating loss of $1.59 per share due to underwriting losses from hurricanes and the COVID-19 pandemic. Despite those losses, the company posted overall EPS of $3.74 due to substantial unrealized investment gains.
These are the financial stocks that had the highest total return over the last 12 months.
|Financial Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Alliance Data Systems Corp. ( ADS)||110.53||5.5||307.7|
|Ally Financial Inc. ( ALLY)||44.90||16.8||296.6|
|Discover Financial Services ( DFS)||94.68||29.0||286.3|
|Financial Select Sector SPDR ETF (XLF)||N/A||N/A||83.3|
- Alliance Data Systems Corp.: Alliance Data Systems provides data-driven and transaction-based marketing and customer loyalty solutions for hundreds of large, mostly consumer-based companies. Its services include outsourced marketing solutions, customer loyalty programs, database marketing, consulting, co-branded retail credit cards, and more. The company announced in late January financial results for FY 2020, which ended Dec. 31, 2020. Net income fell 23.1% as revenue declined 19%. Alliance attributed its revenue decline to the adverse impacts of the COVID-19 pandemic.
- Ally Financial Inc.: Ally Financial is a financial holding company that offers a wide range of digital financial services and insurance products to automotive dealerships and consumers. The company announced in January financial results for FY 2020, which ended Dec. 31, 2020. Net income fell 36.7% despite a 4.6% increase in total net revenue. Compared to the previous year, sharply higher provisions for credit losses in FY 2020 due to the pandemic weighed on net income.
- Discover Financial Services: Discover Financial Services provides direct banking and payment services. It issues credit cards, provides electronic payment services, loans, and other consumer lending and deposit products.
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YCharts. "Financial Data." Accessed March 23, 2021.
White Mountains Insurance Group Ltd. "WHITE MOUNTAINS REPORTS FOURTH QUARTER RESULTS," Pages 9 & 10. Accessed March 23, 2021.
American National Group Inc. "Form 10-K for the fiscal year ended Dec. 31, 2020," Page 71. Accessed March 23, 2021.
American National Group Inc. "Form 10-K for the fiscal year ended Dec. 31, 2020," Page 16. Accessed March 23, 2021.
American National Group Inc. "American National Announces Fourth Quarter and Full Year 2020 Results," Page 1. Accessed March 23, 2021.
RenaissanceRe Holdings Ltd. "RENAISSANCERE REPORTS FOURTH QUARTER 2020 NET INCOME AVAILABLE TO COMMON SHAREHOLDERS OF $189.8 MILLION, OR $3.74 PER DILUTED COMMON SHARE; OPERATING LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS OF $77.1 MILLION, OR $1.59 PER DILUTED COMMON SHARE." Accessed March 24, 2021.
Alliance Data Systems Corp. "Alliance Data Reports Full Year and Fourth Quarter 2020 Results." Accessed March 23, 2021.
Ally Financial Inc. "Ally Financial Reports Fourth Quarter and Full Year 2020 Financial Results," Pages 2 & 7. Accessed March 23, 2021.