Analysts Are Bullish on the Financial Sector



Analysts’ recommendations

1,890 analysts cover the 87 stocks within the Financial Select Sector SPDR ETF (XLF). Of these, 927 have assigned “buy” ratings, 96 have assigned “sell” ratings, and 867 have assigned “hold” ratings to XLF.

As indicated by XLF’s ~50% “buy” ratings, analysts seem positive about the financial sector in the long term based on the robust fundamentals of these companies coupled with expectations of a rate hike in the December FOMC (Federal Open Market Committee) meeting.

Wall Street (SPY) analysts are most bullish about Citigroup (C), as it has received “buy” ratings from 29 analysts among the 34 who cover the stock. Shares of Citigroup have returned -1.7% in 2015 so far.

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In contrast, analysts are most bearish about Progressive (PGR), as it has received the most “sell” ratings. Progressive has received seven “sell” ratings from the 26 analysts tracking it. It has received eight “buy” ratings and 11 “hold” ratings. Shares of Progressive have returned 13.8% YTD (year-to-date).

Price to earnings

Stocks within XLF trade at an average one-year forward price-to-earnings ratio (or PE) of 20.58x. Among these, Prologis and Macerich are the most expensive, with PEs of 71.13x and 70.63x, respectively. Genworth Financial (GNW) and Navient are the cheapest among their peer group, with PEs of 4.81x and 5.94x, respectively.

Price-to-book value

Stocks within XLF are trading at an average price-to-book value ratio (or PBV) of 2.67x. Among these, McGraw Hill Financial (MHFI) and Simon Property Group have PBVs of 38.90x and 13.48x, respectively.


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