Financial providers use their expertise in capital allocation and risk assessment to help facilitate economic growth while offering consumers and businesses essential financial services. Still, investors are uneasy as companies face challenges from an unpredictable interest rate and inflation environment. These doubts have certainly contributed to the industry’s recent underperformance — over the past six months, its 1.4% gain has fallen behind the S&P 500’s 6.2% rise.
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 would avoid.
One Financials Stock to Sell:
T. Rowe Price (TROW)
Market Cap: $24.96 billion
Founded in 1937 by Thomas Rowe Price Jr., who pioneered the growth stock investing approach, T. Rowe Price (NASDAQ:TROW) is an investment management firm that offers mutual funds, advisory services, and retirement planning solutions to individuals and institutions.
Why Do We Think Twice About TROW?
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2.6% annual revenue growth over the last five years was slower than its financials peers
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Earnings per share fell by 1.4% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
T. Rowe Price’s stock price of $116.50 implies a valuation ratio of 11.2x forward P/E. Check out our free in-depth research report to learn more about why TROW doesn’t pass our bar.
Two Financials Stocks to Watch:
Piper Sandler (PIPR)
Market Cap: $5.41 billion
Tracing its roots back to 1895 and rebranded from Piper Jaffray in 2020, Piper Sandler (NYSE:PIPR) is an investment bank that provides advisory services, capital raising, institutional brokerage, and research for corporations, governments, and institutional investors.
Why Do We Like PIPR?
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Impressive 19.6% annual revenue growth over the last two years indicates it’s winning market share this cycle
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Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 34.8% outpaced its revenue gains
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Industry-leading 15.3% return on equity demonstrates management’s skill in finding high-return investments
Piper Sandler is trading at $76.09 per share, or 15.7x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
EVERTEC (EVTC)
Market Cap: $1.83 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.