Financial providers use their expertise in capital allocation and risk assessment to help facilitate economic growth while offering consumers and businesses essential financial services. But uncertainty about fiscal and monetary policy has tempered enthusiasm, limiting the industry's gains to 1.1% over the past six months. This return lagged the S&P 500's 9.9% climb.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. With that said, here are two resilient financials stocks at the top of our wish list and one we’re swiping left on.
One Financials Stock to Sell:
Voya Financial (VOYA)
Market Cap: $7.39 billion
Originally spun off from Dutch financial giant ING in 2013 and rebranded with a name suggesting "voyage," Voya Financial (NYSE: VOYA) provides workplace benefits and savings solutions to U.S. employers, helping their employees achieve better financial outcomes through retirement plans and insurance products.
Why Is VOYA Not Exciting?
- Muted 5.5% annual revenue growth over the last two years shows its demand lagged behind its financials peers
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 4.9% annually
- Loan losses and capital returns have eroded its tangible book value per share this cycle as its tangible book value per share declined by 13.1% annually over the last five years
At $81.52 per share, Voya Financial trades at 8.4x forward P/E. Check out our free in-depth research report to learn more about why VOYA doesn’t pass our bar.
Two Financials Stocks to Buy:
SEI Investments (SEIC)
Market Cap: $11.09 billion
Founded in 1968 as Simulated Environments Inc. to train bank loan officers using computer simulations, SEI Investments (NASDAQ: SEIC) provides technology platforms, investment management, and operational solutions for financial institutions, wealth managers, and investors.
Why Should You Buy SEIC?
- Products and services resonate with customers, evidenced by its respectable 9.9% annualized sales growth over the last two years
- Share buybacks catapulted its annual earnings per share growth to 26%, which outperformed its revenue gains over the last two years
- ROE punches in at 26.5%, illustrating management’s expertise in identifying profitable investments
SEI Investments is trading at $92.24 per share, or 15.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
EVERTEC (EVTC)
Market Cap: $1.45 billion
Operating one of Latin America's leading PIN debit networks called ATH, EVERTEC (NYSE: EVTC) is a payment transaction processor and financial technology provider that enables merchants and financial institutions across Latin America and the Caribbean to accept and process electronic payments.
Why Will EVTC Outperform?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 13.3% annual sales growth over the last two years
- Earnings per share have outperformed the peer group average over the last two years, increasing by 13% annually
- Stellar return on equity showcases management’s ability to surface highly profitable business ventures
EVERTEC’s stock price of $23.56 implies a valuation ratio of 5.9x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
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