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 underperformed the broader market, providing investors with a total return of -4.6% compared to the Russell 1000’s total return of 20.6% over the past 12 months, as of December 16, 2020. All statistics in the tables below are as of December 17.
Here are the top 3 financial stocks with the best value, the fastest growth, and the most momentum.
Best Value Financial Stocks
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 |
| Unum Group (UNM) | 22.27 | 4.5 | 4.8 |
| Virtu Financial Inc. (VIRT) | 23.67 | 4.6 | 5.7 |
| Aflac Inc. (AFL) | 44.68 | 31.4 | 7.0 |
Source: YCharts
- Unum Group: Unum provides disability insurance, group life insurance, and payroll-deducted voluntary benefits for employees primarily at U.S. corporations.
- 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. On November 6, Virtu posted net income of $199.7 million on revenue growth of 71.6% in Q3 2020, which ended September 30, 2020. It was a significant improvement from the net loss of $5.2 million reported in the year-ago quarter. The company said that heightened levels of volatility, bid-ask spreads, and trading volumes due to the COVID-19 pandemic helped to boost revenue.
- Aflac Inc.: Aflac is a holding company whose subsidiaries provide supplemental insurance to individuals in the U.S. and Japan. Its products include insurance for risks such as accident and disability, cancer expense, short-term disability, hospital intensive care, and more. Aflac announced in early November that two of its insurance subsidiaries – Aflac of Columbus and Aflac of New York – had completed the acquisition of Zurich North America’s U.S. Corporate Life and Pensions business. The transaction is valued at less than $200 million.
Fastest Growing Financial Stocks
These are the financial stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
| Fastest Growing Financial Stocks | |||
|---|---|---|---|
|
|
Price ($) | Market Cap ($B) | EPS Growth (%) |
| Jefferies Financial Group Inc. (JEF) | 23.52 | 6.0 | 613.3 |
| White Mountains Insurance Group Ltd. (WTM) | 999.45 | 3.1 | 391.1 |
| KKR & Co. Inc. (KKR) | 40.21 | 22.9 | 316.3 |
Source: YCharts
- Jefferies Financial Group Inc.: Jefferies Financial Group is a global diversified financial services company focused on investment banking and capital markets, asset management, and direct investing.
- White Mountains Insurance Group Ltd.: White Mountains Insurance Group is a holding company whose subsidiaries provide insurance services. It offers property and casualty insurance and reinsurance products. On November 6, the company reported net income growth of 413.9% on revenue growth of 195.5% in Q3 2020, which ended September 30, 2020.
- KKR & Co. Inc.: KKR & Co. is a global investment firm engaged in managing investments across multiple asset classes, including private equity, energy, health care, infrastructure, real estate, credit, and hedge funds.
Financial Stocks with the Most Momentum
These are the financial stocks that had the highest total return over the last 12 months.
| Financial Stocks with the Most Momentum | |||
|---|---|---|---|
|
|
Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) |
| PayPal Holdings Inc. (PYPL) | 230.20 | 269.7 | 110.1 |
| MSCI Inc. (MSCI) | 429.84 | 35.6 | 65.9 |
| Virtu Financial Inc. (VIRT) | 23.67 | 4.6 | 53.2 |
| Russell 1000 | N/A | N/A | 20.6 |
| Financial Select Sector SPDR ETF (XLF) | N/A | N/A | -4.6 |
Source: YCharts
- PayPal Holdings Inc.: PayPal Holdings is a digital and mobile payments provider catering to consumers and merchants. The company provides online payment solutions to customers around the world.
- MSCI Inc.: MSCI is a finance company that offers services to customers including asset managers, banks and wealth managers to help them make key financial decisions, including trading securities and managing their portfolios. MSCI publishes a long list of prominent indexes that track a broad range of securities. The company announced in mid-December that it was deleting a number of Chinese securities from its global investable market indexes. The Chinese securities to be deleted were referenced in the U.S. Executive Order 13959 dated November 12, 2020. The order, signed by U.S. President Donald Trump, bars Americans from investing in certain Chinese companies that the U.S. Defense Department says are suppliers or in some way support China’s military, intelligence, and security services.
- Virtu Financial Inc.: See above for company description.
