Financial institutions play a critical role, offering everything from consumer banking to wealth management and specialized financial solutions. But worries about economic uncertainty and potential market volatility have kept sentiment in check, and over the past six months, the industry's 6.4% return has trailed the S&P 500 by 5.3 percentage points.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. With that said, here is one resilient financials stock at the top of our wish list and two we’re swiping left on.
Two Financials Stocks to Sell:
Northern Trust (NTRS)
Market Cap: $26.5 billion
Founded in 1889 during Chicago's post-Great Fire rebuilding boom, Northern Trust (NASDAQ: NTRS) provides wealth management, asset servicing, and banking solutions to corporations, institutions, families, and high-net-worth individuals globally.
Why Are We Cautious About NTRS?
- 5.2% annual revenue growth over the last five years was slower than its financials peers
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 6.6% annually
Northern Trust is trading at $140.12 per share, or 15.2x forward P/E. Read our free research report to see why you should think twice about including NTRS in your portfolio.
WEX (WEX)
Market Cap: $5.25 billion
Originally founded in 1983 as Wright Express to serve the fleet card market, WEX (NYSE: WEX) provides payment processing and business solutions across fleet management, employee benefits, and corporate payments sectors.
Why Does WEX Give Us Pause?
- Annual revenue growth of 2.4% over the last two years was below our standards for the financials sector
- Earnings per share lagged its peers over the last two years as they only grew by 4% annually
WEX’s stock price of $152.49 implies a valuation ratio of 8.9x forward P/E. Dive into our free research report to see why there are better opportunities than WEX.
One Financials Stock to Buy:
Nelnet (NNI)
Market Cap: $4.88 billion
Starting as a student loan servicer in the 1970s and evolving through the changing landscape of education finance, Nelnet (NYSE: NNI) provides student loan servicing, education technology, payment processing, and banking services while managing a portfolio of education loans.
Why Are We Bullish on NNI?
- Annual revenue growth of 18% over the last two years was superb and indicates its market share increased during this cycle
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 101% exceeded its revenue gains over the last two years
- Adequate return on equity shows management makes decent investment decisions
At $135.74 per share, Nelnet trades at 3.2x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
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