Financial Services Industry Research & Analysis
Home Market Analysis Index Financial Services Industry Research & Analysis
HOLD
Value Indicators
Strengths + Opportunities = 153
Threats + Weaknesses = 92
When strengths & opportunities substantially exceed threats & weaknesses, an investment in the financial industry has great long term potential.
Financial Services Industry Research Report
Financial Industry Profile _ (edit/improve) The finance industry offers products of a varying nature to customers and institutions. This includes entities designated as banks, investment brokers, investment brokerage houses that handle mergers and acquisitions, and other investment entities. Financial products also include various annuities, financial advisory services, tax compliance companies, and many other varieties. Financial companies are very diverse and fit a variety of risk profiles. Due to the market crash of 2008 and 2009, the finance industry got hard hit and stock prices plummeted. Many of these companies have now turned around and have improved their financial picture. The explosive growth in the finance industry during the past 100 years has been recently shrouded by the market downturn, though many opportunities are available for those who are looking for an investment.
Financial Industry Research & Analysis: The financial services industry includes companies whose sales come from the management of money for individuals and institutions. Financial services companies include banks, insurance companies, brokerage, wealth management, and credit card companies. Financial Trading Strategy: The financial industry is sensitive to economic cycles. However, financial service companies increase quickly out of recessions, because interest rates tend to be low. Look for undervalued financial investments during economic recessions when stock prices are low and sell financial investments during the late stages of a bull markets when stock prices are high. The global economy is currently in a recession, therefore, it is the perfect time to purchase financial investments. Upward sloping stock charts and financial news may indicate a selling opportunity while the opposite means that stocks are becoming undervalued.
Financial Industry Analysis, Research & Ratios ► (edit / improve)
Industry Analysis evaluates the major industry characteristics that affect investments. Company specific factors drive the performance of individual companies, but macro-economic factors can affect the performance, stock prices, growth rates, and chart movements of any stock, currency, or commodity. Review industry research before trading.
Warren Buffett Quote: "When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact." No matter the quality of your business, industry economics is an important factor in any value investing decision.
Industry Statistics | Stat | Notes |
---|---|---|
Stock Research Rating | HOLD | … |
Potential (safety margin) | -2% | … |
WACC Discount Rate | 13% | … |
Comparative Multiples | Stat | Notes |
Revenue EV Multiple | 1.6x | … |
EBITDA EV Multiple | 14.6x | High ~ Bad for investors |
EBIT EV Multiple | 19.6x | High ~ Bad for investors |
Cash Flow EV Multiple | 22.8x | Low ~ Good for investors |
Book Value EV Multiple | 1.0x | … |
Discounted Cash Flow (DCF) | Ratios | Notes |
Revenue Growth | 14% | High ~ Good for investors |
EBITDA Margin | 18% | … |
EBIT Margin | 16% | … |
Cash Flow Margin | 11% | … |
Taxes Rate | 42% | High ~ Bad for investors |
Debt-Equity Ratio | 5% | … |
ROIC | 3% | … |
Reinvestment Rate | -6% | … |
WACC Discount Rate | Rates | Notes |
Risk Free Rate | 4% | Low ~ Good for Investors |
Cost of Debt | 7% | Low ~ Good for Investors |
Equity Risk Premium | 5% | … |
Debt Required Return of Debt | 5% | … |
Required Return of Equity | 9% | … |
1 Investment potential (margin of safety) is a weighted average of the discounted cash flow (DCF), the enterprise value (EV) market multiple, and the Warren Buffett investment method.
2 The weighted average cost of capital (WACC) for the industry is a broad representation of the WACC for each individual company. A sub-industry WACC offers both stability and accuracy for each individual company.
Description: The financial services industry includes companies whose sales come from the management of money for individuals and institutions. Financial services companies include banks, insurance companies, brokerage, wealth management, and credit card companies (see full financial description: competitors, industry ratios, best stocks, market leaders, aggregate SWOT Analysis, and streaming industry news).
Profit Analysis: The best way to profit from financial service stock investments is to find the most undervalued investments (Wall Street and Main Street buy ratings) during economic recessions. Those investments should be undervalued (see Wall Street on left side), and have high Main Street Common Sense investment ratings (see Main Street on right side). Interest rates are also lowest during this time period, which decreases the cost of borrowing money for financial service companies.
When an economic recovery occurs, financial stocks tend to outperform the general stock market, because consumers and businesses quickly resume spending on items such as cars or business loans they wanted, but resisted obtaining during tougher economic times. Eventually financial stocks become overvalued, because profits and stock prices increase past their fair values. During the last stages of an economic business cycle, just before a recession, it is best to sell financial stocks, because they are likely to decrease in price. Interest rates are highest at the end of recessions to fight inflation by making money for banks more expensive. Expensive (overvalued) stocks with low Main Street Common Sense ratings should be sold at any time to invest in better stocks. Two buys ratings are the best and two sell ratings are the worst possible stock investments.
Trading Strategy: During economic recessions, consumers and businesses tend to cut back on expenses and investments to save money during tough economic times. Bank loans, equity or debt raising, general spending and many other financial activities slow during recessions. Less spending decreases business revenue and eventually decreases the stock prices of financial services companies. During economic recoveries, consumers have a greater desire to spend money and make business investments. Higher spending increases business revenue and eventually increases stock prices. During longer economic expansions, financial services may actually increase faster than the general market due to large investments by companies and mergers and acquisitions between companies. Consumers have more confidence in the stock market and increase stock investments and private business investments. Over-investment leads to higher inflation and higher interest rates, which make it harder to obtain money.
The return on money lent minus the expense of borrowing money equals the profits for many financial services companies. When interest rates increase, this raises the expense of borrowing money. Generally, interest rates increase near the end of the expansion phase of the business cycle to slow the potential for inflation. Interest rates are generally lowest during recessions, because inflation risk is lowest and the government wants to encourage business investments by making money relatively cheap to obtain.
Financial Services Industry Leader
List of Financial Companies With Research Reports
1st Source (SRCE) Investment Research
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Thomson Reuters (TRI) Investment Research
Torchmark (TMK) Investment Research
Toronto Dominion (TD) Investment Research
Tower Group (TWGP) Investment Research
Towne Bank (TOWN) Investment Research
TradeStation (TRAD) Investment Research
Transatlantic (TRH) Investment Research
TriCo Bancshares (TCBK) Investment Research
Triple-S Mgmt (GTS) Investment Research
TrustCo Bank (TRST) Investment Research
Trustmark (TRMK) Investment Research
U.S. Bancorp (USB) Investment Research
U.S. Global Investors (GROW) Investment Research
UBS AG (UBS) Investment Research
UCBH (UCBH) Investment Research
UMB Financial (UMBF) Investment Research
Umpqua (UMPQ) Investment Research
Unibanco Brasileiros (UBB) Investment Research
Union Bankshares (UBSH) Investment Research
United Bankshares (UBSI) Investment Research
United Community Banks (UCBI) Investment Research
United Dominion Realty (UDR) Investment Research
United Financial (UBNK) Investment Research
United Fire & Casualty (UFCS) Investment Research
United Security (UBFO) Investment Research
United Security Banc (USBI) Investment Research
Unitrin (UTR) Investment Research
Universal Health Realty (UHT) Investment Research
Univest of Pennsylvania (UVSP) Investment Research
Unum Group (UNM) Investment Research
Urstadt Biddle Properties (UBA) Investment Research
U-Store-It Trust (YSI) Investment Research
Validus (VR) Investment Research
Valley National (VLY) Investment Research
Value Line (VALU) Investment Research
Ventas (VTR) Investment Research
ViewPoint Financial (VPFG) Investment Research
Virginia Commerce (VCBI) Investment Research
Visa (V) Investment Research
Vornado Realty (VNO) Investment Research
W.P. Carey (WPC) Investment Research
W.R. Berkley (WRB) Investment Research
Wachovia (WB) Investment Research
Waddell & Reed Financial (WDR) Investment Research
Washington Federal (WFSL) Investment Research
Washington Real Estate (WRE) Investment Research
Washington Trust (WASH) Investment Research
Webster Financial (WBS) Investment Research
Weingarten Realty Investors (WRI) Investment Research
Wells Fargo (WFC) Investment Research
WesBanco (WSBC) Investment Research
West Bancorporation (WTBA) Investment Research
Westamerica (WABC) Investment Research
Western Alliance Banco (WAL) Investment Research
Westfield Financial (WFD) Investment Research
Westwood Holdings (WHG) Investment Research
White Mountains Ins (WTM) Investment Research
Whitney (WTNY) Investment Research
Willis Group (WSH) Investment Research
Wilmington (WL) Investment Research
Wilshire Bancorp (WIBC) Investment Research
Wintrust Financial (WTFC) Investment Research
World Acceptance (WRLD) Investment Research
WSFS (WSFS) Investment Research
XL Capital (XL) Investment Research
Yadkin Valley (YAVY) Investment Research
Zapata (ZAP) Investment Research
Zenith National Insurance (ZNT) Investment Research
Zions (ZION) Investment Research
List of Financial ETFs With Research Reports
DJ Emerging Mrkts Financials Titans (EFN)
MSCI Far East Financials Sector (FEFN)
Short KBW Regional Banking (KRS)
MSCI ACWI ex US Financials Sector (AXFN)
Global X China Financials ETF (CHIX)
MSCI Emerging Mrkts Financials Sector (EMFN)
MSCI Europe Financials Sector (EUFN)
RP Financials ETF (RFF)
Ultra KBW Regional Banking (KRU)
First Trust NASDAQ ABA Community Bank (QABA)
SPDR KBW Mortgage Finance ETF (KME)
PowerShares Dynamic Insurance (PIC)
SPDR S&P Intl Financial Sector ETF (IPF)
PowerShares Dynamic Banking (PJB)
RevenueShares Financials Sector (RWW)
PowerShares Dynamic Financial (PFI)
WisdomTree Intl Financial Sector (DRF)
First Trust Financials AlphaDEX (FXO)
ProShares Short Financials (SEF)
iShares DJ U.S. Insurance (IAK)
SPDR KBW Regional Banking ETF (KRE)
iShares DJ U.S. Regional Banks (IAT)
iShares S&P Global Financial (IXG)
SPDR KBW Insurance ETF (KIE)
iShares DJ U.S. Broker-Dealers (IAI)
Claymore Global Exchanges Brokers and Asset (EXB)
Vanguard Financials (VFH)
iShares DJ U.S. Financial Sector (IYF)
SPDR KBW Capital Mrkts ETF (KCE)
HOLDRS Merrill Lynch Regional Bank (RKH)
iShares DJ U.S. Financial Services (IYG)
Rydex S&P Equal Weight Financial ETF (RYF)
SPDR KBW Bank ETF (KBE)
Direxion Financial Bear 3X Shares (FAZ)
Rydex 2x S&P Select Sector Financial ETF (RFL)
Rydex Inverse 2x S&P Select Sector Financial ETF (RFN)
Direxion Financial Bull 3X Shares (FAS)
ProShares UltraShort Financials (SKF)
ProShares Ultra Financials (UYG)
List of Financial Mutual Funds With Research Reports
Invesco Global Real Estate A (AGREX)
Alpine International Real Estate (EGLRX)
Fidelity International Real Estate (FIREX)
Ing Global Real Estate A (IGLAX)
Ing International Real Estate A (IIRAX)
Cohen & Steers International Realty A (IRFAX)
Morgan Stanley Inst Intl Real Estate I (MSUAX)
Northern Global Real Estate Index (NGREX)
Prudential Global Real Estate A (PURAX)
Dws Rreef Global Real Estate Secs A (RRGAX)
Third Avenue Real Estate Value Instl (TAREX)
Invesco Van Kampen Rel Est Secs A (ACREX)
Profunds Banks Ultrasector Inv (BKPIX)
Burnham Financial Industries I (BMFIX)
Burnham Financial Industries C (BURCX)
Burnham Financial Industries A (BURFX)
Burnham Financial Services A (BURKX)
Columbia Real Estate Equity Z (CREEX)
Cohen & Steers Realty Income A (CSEIX)
Cohen & Steers Realty Shares (CSRSX)
Davis Financial B (DFIBX)
Fidelity Advisor Financial Services C (FAFCX)
Fidelity Advisor Financial Services A (FAFDX)
Fidelity Advisor Financial Services T (FAFSX)
Fbr Large Cap Financial Investor (FBRFX)
Fbr Small Cap Financial Investor (FBRSX)
Jhancock Financial Industries A (FIDAX)
Jhancock Financial Industries B (FIDBX)
Jhancock Financial Industries C (FIDCX)
Fidelity Select Financial Services (FIDSX)
Jhancock Regional Bank A (FRBAX)
Jhancock Regional Bank C (FRBCX)
Jhancock Regional Bank B (FRBFX)
First American Real Estate Secs A (FREAX)
Fidelity Real Estate Investment (FRESX)
Fidelity Real Estate Income (FRIFX)
Invesco Financial Services Investor (FSFSX)
Fidelity Select Brokerage & Invmt Mgmt (FSLBX)
Fidelity Select Insurance (FSPCX)
Fidelity Select Banking (FSRBX)
Fidelity Consumer Finance (FSVLX)
Forward Banking And Finance A (HSSAX)
Forward Banking And Finance C (HSSCX)
Invesco Real Estate A (IARAX)
Icon Financial (ICFSX)
Invesco Financial Services A (IFSAX)
Invesco Financial Services C (IFSCX)
Ivy Real Estate Securities A (IRSAX)
Kinetics Market Opportunities Adv A (KMKAX)
Vista Listed Private Equity Plus A (LPEAX)
Blackrock Global Financial Svcs Inv C (MCFNX)
Blackrock Global Financial Svcs Inv A (MDFNX)
Oppenheimer Real Estate A (OREAX)
Prudential Financial Svcs A (PFSAX)
Virtus Real Estate Securities A (PHRAX)
T. Rowe Price Financial Services (PRISX)
Prudential Financial Svcs B (PUFBX)
Prudential Financial Svcs C (PUFCX)
American Century Real Estate Inv (REACX)
Davis Financial A (RPFGX)
Davis Real Estate A (RPFRX)
Dws Rreef Real Estate Securities A (RRRAX)
Royce Financial Services Svc (RYFSX)
Legg Mason Inv Counsel Fincl Svcs A (SBFAX)
Legg Mason Inv Counsel Fincl Svcs C (SFSLX)
JPMorgan Us Real Estate Sel (SUIEX)
JPMorgan Us Real Estate A (SUSIX)
Schwab Financial Services (SWFFX)
T. Rowe Price Real Estate (TRREX)
Vanguard Reit Index Inv (VGSIX)
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