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, with a total return of 66.7% compared to the iShares Russell 1000 ETF’s (IWB) total return of 57.6% over the past 12 months. These performance numbers and all statistics in the tables below are as of April 22, 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) |
1202.03 | 3.7 | 5.2 |
| Virtu Financial Inc. ( VIRT) |
31.28 | 6.0 | 6.0 |
| Rocket Companies Inc. ( RKT) |
21.90 | 43.5 | 6.5 |
Source: YCharts
- 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. On Feb. 5, 2021, the company announced its Q4 2020 financial results, with net income attributable to common shareholders coming in at $489.2 million, compared to $60.9 million in Q4 2019. The increase was largely driven by a $391 million investment gain from its interest in MediaAlpha, which completed an IPO in October 2020.
- Virtu Financial Inc.: Virtu Financial is a financial services company that acts as a market maker and provides liquidity to financial markets across the world. The company operates a multi-asset, multi-currency technology platform and primarily earns money from small bid/ask spreads across transactions. Market volatility is good for Virtu as its boosts trading and demand for liquidity.
- Rocket Companies Inc.: Rocket’s goal is to get people on the property ladder and achieve financial freedom. The company helps its customers to obtain mortgages, personal and car loans, as well as other personal financial services. Its flagship business is Rocket Mortgage, an online mortgage application tool.
These are the top financial stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
| Fastest Growing Financial Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| White Mountains Insurance Group Ltd. (WTM) | 1202.03 | 3.7 | 724.8 | 197.1 |
| Fifth Third Bancorp ( FITB) |
37.36 | 26.6 | 2,220 | 0.5 |
| Goldman Sachs Group Inc. (GS) | 335.27 | 114.1 | 498.1 | 127.9 |
Source: YCharts
- White Mountains Insurance Group Ltd.: See above for company description.
- Fifth Third Bancorp: Fifth Third Bancorp is a bank and financial holding company serving commercial and individual customers. The company offers various deposit accounts, loans, and a wealth and asset management service. On April 20, 2021, Fifth Third Bancorp announced that net income available to common shareholders stood at $674 million in its Q1 2021, representing a big jump on the $29 million reported in Q1 2020. The Q1 2020 period included a $640 million provision for credit losses, compared to a $173 million benefit in Q1 2021.
- Goldman Sachs Group Inc.: Goldman Sachs is a major financial institution with investment banking, trading, investment management, and consumer banking operations. On April 14, 2021, the company reported Q1 2021 net income applicable to common shareholders of $6.7 billion, six times what it earned in Q1 2020. Goldman Sachs’ revenue between these periods doubled to $17.7 billion.
These are the financial stocks that had the highest total return over the last 12 months.
| Financial Stocks with the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| Ally Financial Inc. ( ALLY) |
48.43 | 18.0 | 252.9 |
| OneMain Holdings Inc. ( OMF) |
53.79 | 7.2 | 252.6 |
| Western Alliance Bancorp ( WAL) |
101.08 | 10.5 | 234.8 |
| iShares Russell 1000 ETF (IWB) | N/A | N/A | 57.6 |
| Financial Select Sector SPDR ETF (XLF) | N/A | N/A | 66.7 |
Source: YCharts
- 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. On April 16, 2021, the company reported Q1 2021 net income of $796 million, reversing the $319 million loss from Q1 2010. Revenue rose 37% YOY.
- OneMain Holdings Inc.: OneMain Holdings is a consumer finance company that is mainly in the business of extending and servicing personal loans. The company, which has about 1,500 branches across 44 states, also offers optional insurance products to its customers, including credit life insurance, credit involuntary unemployment insurance, disability income protection policies, and home and auto plans.
- Western Alliance Bancorp: Western Alliance Bancorp provides banking services primarily to business customers. On April 15, 2021, the company reported that its Q1 2021 net income rose by 129% YOY to $192.5 million.
The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
