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. 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 lagged the S&P 500's performance over the last 12 months. XLF posted a 12-month trailing total return of 20.8% versus the S&P's 27.0%. These market performance numbers and the statistics in the tables below are as of January 24.
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)||28.67||5.9||5.8|
|Synchrony Financial (SYF)||36.20||23.4||6.6|
|MetLife Inc. (MET)||51.80||47.6||6.9|
- 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. According to its Q4 2019 earnings release January 24, Synchrony saw net interest income decrease by 7.0% to $4.0 billion last quarter.
- MetLife Inc.: MetLife offers individual insurance products, group insurance, employee benefits, retail banking, and other financial services. On December 5, the company announced the acquisition of PetFirst, which currently administers insurance coverage for more than 40,000 pets.
Financial Stocks with the Fastest Earnings Growth
These are the financial stocks in the S&P 500 with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
|Financial Stocks with the Fastest Earnings Growth|
|Price ($)||Market Cap ($B)||EPS Growth (%)|
|MetLife Inc. (MET)||51.80||47.6||161.4|
|Bank of New York Mellon Corp. (BK)||47.02||42.4||81.0|
|Synchrony Financial (SYF)||36.20||23.4||75.8|
- MetLife Inc.: See above for company description.
- Bank of New York Mellon Corp.: Investment company Bank of New York Mellon provides financial services including wealth management, securities finance, foreign exchange, as well as brokerage services to customers worldwide.
- Synchrony Financial: See above for company description.
Financial Stocks with the Most Momentum
These are the financial stocks in the S&P 500 that had the highest total return over the past 12 months.
|Financial Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|MSCI Inc. (MSCI)||279.15||23.7||73.5|
|MarketAxess Holdings Inc. (MKTX)||367.28||13.9||68.3|
|Moody's Corp. (MCO)||257.09||48.5||67.8|
|Financial Select Sector SPDR Fund (XLF)||N/A||N/A||20.8|
- MSCI Inc.: MSCI offers market indexes and analysis to help investors trade securities and manage their portfolios. On January 21, MSCI announced plans to enter into a strategic relationship with portfolio management and analytics software company The Burgiss Group, investing $190 million in a "significant minority interest."
- 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. The company announced monthly trading volume of $466.9 billion for December, an increase of more than 255% YOY.
- Moody's Corp.: Moody's specializes in credit ratings, research, and risk analysis for customers in global capital markets.
YCharts. "Financial Data," Accessed Jan. 27, 2020.
Unum Corp. "2020 Outlook Meeting," Accessed Jan 26, 2020.
Synchrony Financial. "Synchrony Financial Reports Fourth Quarter Net Earnings of $731 Million or $1.15 Per Diluted Share," Page 2. Accessed Jan. 26, 2020.
MetLife Corp. "MetLife to Acquire U.S. Pet Health Insurance Administrator, PetFirst," Accessed Jan 26, 2020.
MSCI, Inc. "MSCI and Burgiss Enter Into Strategic Relationship," Accessed Jan. 26, 2020.
MarketAxess Holdings, Inc. "MarketAxess Announces Monthly Volume Statistics for December 2019," Page 2. Accessed Jan. 26, 2020.