Top 3 stock bets in the financial sector

1:36 am ET, 22 Apr 2019

Disclaimer: The following bite is my perspective on utilities investing; it is not an endorsement or a recommendation for investors to buy, sell or short any stock.

The financial services sector has underperformed in the past 12 months because of a number of factors. Some investors had high expectations for interest rates which are important for banks and companies earning interest on their loans.  Another reason is the reduction of asset-based fees, which have an impact on wealth management firms.

But the sector on the whole generates healthy returns.  We've singled out a couple of stocks we'd like you to take a further look at. 

1. American International Group (AIG)

American International Group (AIG) is our first pick.  AIG's CEO is Brian Duperreault is efficient in resolving the commercial property-casualty insurance underwriting issue.  He was the main architect of Chubb's franchise which produced notable underwriting margins. 

Duperreault had vowed that AIG will generate underwriting profits this year.

Structural issues are not noticeable in the core operations of the company.  The current market price, which is 0.65 times the book value indicates a long duration of low returns.

Over the last month, American International Group (AIG) returned +8.04%.

American International Group (AIG) forward P/E ratio is 9.22, and it’s low compared to its industry peers’ P/E ratios.

American International Group (AIG) average analyst price target is 9.56% above its current price ($46.04).

For the latest price and analysis of American International Group, please visit Finstead and ask for "AIG" or "AIG analysis".


2. Capital One Financial (COF)

Capital One Financial Corporation (COF) is our second pick. 

The expected slowdown of US economy will definitely have an impact on Capital One; however, the company is tech-savvy and embraces an open-source software strategy that can help it win market share.

The company's success in winning Walmart's business is a huge sign of confidence. It shows that Capital One leads among its peers in securing large business accounts.

Over the last month, Capital One Financial (COF) returned +5.88%.

Capital One Financial (COF) forward P/E ratio is 7.34, and it’s low compared to its industry peers’ P/E ratios.

Capital One Financial Corporation (COF) average analyst price target is 13.24% above its current price ($88.11).

For the latest price and information on Capital One Financial Corporation, please visit Finstead and ask for "COF" or "COF analysis".

3. Credit Suisse Group (CS)

Credit Suisse Group (CS) is our third pick.  This is a European bank that has a strong position in the investor market of ultra-high-net-worth individuals (ultra-HNIs)

Credit Suisse has the potential to generate profitability in excess of its cost of capital.  Customer switching costs are high because of the high-touch service and complex requirements of ultra HNIs.

Over the last month, Credit Suisse Group (CS) returned +8.72%. Credit Suisse Group (CS) average analyst price target is 6.62% above its current price ($13.44).

For the latest price and analysis of Credit Suisse Group, please visit Finstead and ask for "CS" or "CS analysis".

American International Group, Inc. (AIG) Stock Guide

Updated at: 10:32 am ET, 17 Sep 2020

Before we start: if you're looking for AIG stock price, you can quickly find it out by visiting Finny and typing "AIG quote". If you're looking for a quick scoop on AIG stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "AIG". You'll get all this info in one place. Or you can just type "AIG news" to get the latest stock news.

Looking to buy or sell American International Group, Inc. (AIG)? Interested in getting the full scoop on AIG, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this AIG stock guide, we'll address key questions about AIG, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are AIG earnings?
2. What is AIG dividend?
3. What is AIG dividend yield?
4. What is AIG stock forecast (i.e., prediction)?
5. AIG buy or sell? What is AIG Finny Score?
6. What are the reasons to buy AIG? Why should I buy AIG stock?
7. What are the reasons to sell AIG? Why should I sell AIG stock?
8. What are AIG key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are AIG earnings?

AIG trailing 12-month earnings per share (EPS) is -$5.29.

2. What is AIG dividend?

AIG forward dividend is $1.28.

3. What is AIG dividend yield?

AIG forward dividend yield is 4.39%.

Analyst Predictions

4. What is AIG stock forecast (i.e., prediction)?

Based on AIG analyst price targets, AIG stock forecast is $37.57 (for a year from now). That means the average analyst price target for AIG stock is $37.57. The prediction is based on 19 analyst estimates.

The low price target for AIG is $31.00, while the high price target is $48.00.

AIG analyst rating is Buy.

Analysis

5. AIG buy or sell? What is AIG Finny Score?

#{finnyScore:78}Our quantitative analysis shows 7 reasons to buy and 2 reasons to sell AIG, resulting in Finny Score of 78.

6. What are the reasons to buy AIG? Why should I buy AIG stock?

Here are the reasons to buy AIG stock:

  • The aftermath of AIG's issues during the financial crisis occupied much of management's attention for quite some time. With these issues largely resolved, management is now focused on the company's operations, and there could be ample scope for improvement.
  • Through its life insurance operations, AIG would benefit from a higher-interest-rate environment.
  • The current focus on risk-adjusted returns sets a proper course for the company, and just increasing profitability to the level of its peers would represent a material improvement.
  • AIG profitability is improving. The YoY profit margin change was 12.27 percentage points. See AIG profitability chart.
  • AIG forward dividend yield is 4.39%, higher than the industry (1.15%) and sector (1.11%) forward dividend yields. See AIG forward dividend chart.
  • AIG Price/Book ratio is 0.41, which is low compared to its industry peers’ P/B ratios. See AIG forward Price/Book ratio chart.
  • AIG Price/Sales ratio is 0.52, which is low compared to its industry peers’ P/S ratios. See AIG forward Price/Sales ratio chart.
  • AIG average analyst rating is Buy. See AIG analyst rating chart.
  • AIG average analyst price target ($37.57) is above its current price ($28.92). See AIG price target chart.
  • AIG cash to debt ratio is 0.62, higher than the average industry (0.26) and sector (0.18) cash to debt ratio. See AIG cash to debt chart.

7. What are the reasons to sell AIG? Why should I sell AIG stock?

Let's look at the reasons to sell AIG stock (i.e., the bear case):

  • AIG has a history of underreserving for claims, making it difficult to trust that current reserves are adequate.
  • AIG has yet to prove that its existing franchise can earn adequate returns.
  • As a diversified player in a industry that is not particularly moaty, AIG will always be dealing with issues in some part of its business.
  • AIG quarterly revenue growth was -25.20%, lower than the industry and sector average revenue growth (0.71% and 1.27%, respectively). See AIG revenue growth chart.
  • AIG short interest (days to cover the shorts) ratio is 2.16. The stock garners more short interest than the average industry, sector or S&P 500 stock. See AIG short interest ratio chart.

Key Stats

8. What are AIG key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for AIG:

Metrics AIG
Price $27.08
Average Price Target / Upside $37.57 / 38.74%
Average Analyst Rating Buy
Forward Dividend Yield 4.39%
Industry Insurance - Diversified
Sector Financial Services
Number of Employees 49,600
Market Cap $25.11B
Forward P/E Ratio 6.76
Price/Book Ratio 0.52
Revenue (TTM) $48.59B
YoY Quarterly Revenue Growth -25.20%
Profit Margin -9.45%

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