iShares US Financials
The Great American Deleveraging: Fact or Myth?
The great American deleveraging has largely been limited to the financial sector (XLF) (IYF). Non-financial debt is still much higher than historical averages.
Blackstone, Carlyle, and KKR Saw Real Estate Growth in 3Q16
The real estate space has seen a relatively strong performance when compared to other asset classes.
Is It Time to Play Value Stocks?
In the past few years, value stocks haven’t posted impressive gains. Many of them look cheap and have trailed the broader market as investors lap up growth stocks.
A Look at Capital One’s Valuations
Capital One Financial Corporation’s (COF) PE (price-to-earnings) ratio is 8.77x on an NTM basis compared to its competitors’ average PE ratio of 20.79x.
Factors That Will Drive Goldman Sachs’ Earnings in 2016
Goldman Sachs derives 16% of its revenues from the investing and lending business. So far, 2016 has been a rough year for the financial sector.
Is the Financial Sector Set to Outperform?
In addition to the promising signs of the financial sector passing the rigor of this stress test, talk of deregulation makes the financial sector even more attractive.
How Wells Fargo Creates Value for Shareholders
Wells Fargo has consistently performed well in stress tests. This performance has let the company increase its dividends annually.
What Impacted Wells Fargo’s First Quarter Earnings?
Wells Fargo’s first quarter earnings surpassed expectations but fell 5% YoY (year-over-year). The net interest income increased by 6% to $11.7 billion.
What Do Analysts Recommend for JPMorgan Chase and Wells Fargo?
In a Bloomberg survey of 37 analysts, 19 analysts (51%) have assigned a “buy” rating to Wells Fargo (WFC) while 13 (35%) have rated it as “hold.” The stock currently has five “sell” ratings.
Blackstone’s Real Estate Growth in Europe and Asia in 2017
The Blackstone Group (BX) garnered realizations of $3.5 billion in 4Q16, reflecting a year-over-year rise in improved valuations.
Will B/E Aerospace Deal Affect Rockwell Collins’s PE multiples?
Among the analysts surveyed by Bloomberg, eight analysts have a “buy” rating and seven have a “hold” rating on Rockwell Collins (COL). There were no “sell” ratings on COL stock.
How Did Bank of America Perform on 2016 Stress Tests?
Bank of America boosted its dividends by 50% to $0.075 after it cleared the Fed’s 2016 stress tests.
Why Small-Cap Banks Have Been Underperforming
Small-cap banks have been underperforming due to the yield curve that has been flattening since the start of 2014.
KKR Realized Performance, Investment Income Declined in 1Q16
In 1Q16, KKR & Co. (KKR) saw its distributable earnings decline on lower bookings. The company made realized performance income of $99 million compared to $308 million in 1Q15.
Carlyle’s Portfolio Appreciated on These
Carlyle managed 5% appreciation in portfolio valuation in 4Q16 and 12% in fiscal 2016, reflecting an improved YoY performance.
Why the CFNAI Has Historically Led Overall Growth
There are no truly reliable measures of future growth. That said, certain economic statistics have historically led overall growth.
How Is Carlyle’s Portfolio Performing in 2Q16?
Carlyle Group’s (CG) carry fund valuations appreciated by 1% in 1Q16.
Emerson Electric Expects Weak Market Conditions to Spill into Fiscal 2017
Emerson Electric’s sales in fiscal 2017 are expected to fall between 1% and 3% on an organic as well as net sales basis.
Leading Players in the US Annuity Industry
The market leader in the fixed annuity industry is Allianz Life Insurance Company of North America with 13% market share, followed by New York Life with 8%.
KKR Achieves Higher Realization on Improved Activity in 2Q16
In 2Q16, KKR & Co. (KKR) saw its distributable earnings surge on exit activity in the private equity space. The company made realized performance income of $310 million compared to $258 million in 2Q15.
Rich Valuations and Higher Rates Lead to Poor Stock Returns
Rich valuations and higher rates are a lethal combination for stocks. Over the longer term, multiple expansion and tightening lead to negative returns.
A Flat Yield Curve Is a Squeeze on Corporate Profitability
Less lending leads to lesser investment and business expansion activities. This infringes on corporate profitability and overall economic profit growth.
Carlyle Group’s Private Equity Portfolio Has Risen in 1Q16
Carlyle’s total carry fund valuations rose by 2% in 4Q15, led by a recovery in the valuations of private equity funds.
AIG Valuations Low on SIFI, Operating Performance, Restructuring
American International Group’s (AIG) stock has declined by more than 13% over the past six months, mainly due to weak operating performance, higher reserve developments, and declining returns on alternative investments.
KKR Expected to See Subdued Realized and Investment Performance
In 1Q16, KKR & Co. (KKR) saw its distributable earnings decline due to lower bookings. The company had a realized performance income of $99 million.
Leases Drive Up Credit Losses in Deere’s Financial Unit
Deere & Company’s (DE) financial services (IYF) unit represented 10.2% of revenues in 3Q16, which is comparable to levels of 10.4% in 3Q15.
How Did KKR’s Distributions Look in 4Q16?
KKR & Company (KKR) has managed higher realizations over the past few quarters as reflected in its higher distributions to limited partners or investors.
Why Stanley Security Changed Gears
Profit margins in Stanley Security increased from 10.2% in 2013 to 11.4% in 2015.
Carlyle’s Portfolio Could Continue on a Subdued Trajectory in 2Q16
Carlyle’s performance is directly impacted by the global macroeconomic environment as well as financial conditions in and outside of the United States.
How Did Greece Get Here? The Origins of the Crisis
Crisis has embroiled Greece for more than half a decade. The once prosperous economy has been reduced to shambles and is teetering on the verge of bankruptcy. How did Greece get here?
Analysts’ Views on Visa Stock
Analysts still love Visa (V) stock, primarily because of its strong outlook.
A Look at IYF’s Outflows So Far in 2016
The iShares US Financials ETF (IYF) recorded net outflows of $847 million in 2015. As of March 24, 2016, investors have withdrawn $360.6 million from IYF.
What’s Wells Fargo’s Outlook for 4Q17?
In the period since the 2007 crisis, the banking sector (IYF) is at a peak. The sector faced headwinds amid near-zero interest rates, weak macroeconomic outlook, falling oil prices, and weaker global trade.
AIG Sees Contraction in Consumer Finance Division in 2Q15
AIG’s consumer finance business recorded a 9% decline in pre-tax operating earnings in 2Q15.
What Led to Chubb’s Discounted Valuations?
Chubb has been successful in gaining investors’ confidence as the company rewarded shareholders with $667 million in 2Q17 via repurchases and dividends.
Why Rate Hikes Help Maintain Wells Fargo’s Interest Spreads
Wells Fargo (WFC) has maintained higher net interest margins or NIMs, helped by rate hikes and higher operating leverage compared to peers (IYF).
Prudential Financial’s Valuations Rise, Still Trade at a Discount
Prudential Financial’s shares appear to be currently undervalued despite the improvements in its overall fundamentals.
Analysts Maintain Bullish Stance on Textron despite Poor Returns
According to Bloomberg, eight analysts have given Textron (TXT) “buy” recommendations, three have rated it a “hold,” and one has given it a “sell.”
You can invest in Citigroup through a wide selection of ETFs
Broad market ETFs also hold Citigroup. Citigroup has a large market capitalization and so is a part of the S&P 500 Index.
Passport Capital Invests over $127 Million in Banks in 4Q14
The investment in banking stocks appears to be based on the view that such stocks could outperform the market given a rise in short-term interest rates.
Is the S&P 500 Reasonably Valued?
Currently, the US benchmark index, the S&P 500, has risen 6% year-to-date. The market is trading at higher valuations compared to its historical average.
Capital One by Segment in 4Q15
In 4Q15, Capital One’s non-performing loans in its Commerical Banking segment increased to $550 million due to downgrades of oil and gas loans.
Why should you invest in insurance ETFs?
Insurance ETFs are poised to gain from industry growth. As interest rates improve, insurers should see better earnings due to higher investment returns.
Cryptocurrencies Could Prove Warren Buffett Wrong
Cryptocurrencies could have a tough time proving Buffett wrong. Massive volatility and frequent scams don’t make cryptocurrencies look attractive.
Buffett Banking Too Much on the Banking Sector with J.P. Morgan?
As we discussed in the last three parts of this series, renowned billionaire investor Warren Buffett’s Berkshire Hathaway (BRK.A)(BRK.B) has increased its bets on the banking sector.
Buffett Raised Bets on U.S. Bancorp and Goldman Sachs in Q3 2018
So far in this series, we’ve looked at Warrant Buffet’s investment firm, Berkshire Hathaway’s (BRK.A)(BRK.B), top five investments in the third quarter.
How Warren Buffett’s Top Two Bank Holdings Changed in Q3 2018
Now let’s see how Buffett’s top two bank holdings (IYF) changed in the last quarter.
Improving Economy and Retail Sales to Boost Mastercard’s Q3 Results
A healthy job market and a steady hike in wages have increased the spending power of consumers.
Visa’s Q4 Results to Gain from Improving Economy and Retail Sales
The US GDP grew 4.2% in the second quarter, which was almost double the 2.2% increase registered in the first quarter.
Mastercard to Gain from Improving Economy and Rising Retail Sales
The Consumer Confidence Index increased to 133.4 in August from 127.9 in July—its highest reading since its October 2000 reading of 135.8.
Improving GDP and Retail Sales Could Boost Visa’s Platform Usage
Improving GDP growth, a healthy job market, and steady wage growth have increased the disposable income of consumers, thereby giving them greater spending power.
Will Analysts Stay Optimistic about Visa Stock?
In the fiscal third quarter, Visa (V) witnessed strong growth on a YoY (year-over-year) basis in all its primary business metrics.
What Fueled Visa’s Payment Volumes in Fiscal Q3 2018?
In the third quarter, Visa (V) witnessed a rise in payment volumes from the United States on a sequential basis from 10.1% to 10.5%.
How Analysts Rate Mastercard
Analysts’ rating on Mastercard (MA) improved in July compared to June.
Understanding Visa’s Take on Contactless Payments
Visa (V) has been making efforts to increase the use of contactless payments in the United States after experiencing a positive response.
Mastercard Has Premium Valuations after Strong Q2 2018 Results
Mastercard (MA) has a price-to-earnings ratio of 28.04x on an NTM (next-12-month) basis compared to the peer average of 15.95x.
Understanding Visa’s Views on Europe and India
Visa (V) posted total payment volumes amounting to $2.1 trillion in its fiscal third quarter.
How Mastercard’s Gross Dollar Volumes and Net Revenues Trended
In the second quarter, Mastercard (MA) witnessed total gross dollar volumes (or GDV) of $1.5 trillion.
Fintech Startups Grabbed a Larger Share of US Personal Loans
The total spending on Visa’s (V) network rose 11% to $2.1 trillion in the second quarter—slightly better than analysts’ estimates of $2.09 trillion.
Discover Financial’s Q2 2018: Total Loans Grew 9% Year-over-Year
On July 26, Discover Financial Services (DFS) released its earnings report for the second quarter.
Visa Posts Strong Fiscal Q3 2018 Results: Payments Volume Rose
On July 25, Visa (V) posted its third fiscal quarter results. The company posted an EPS of $1.20, which exceeds Wall Street analysts’ expectations.
Berkshire Is Still Staying Away from Big e-Commerce Businesses
Services growth Berkshire Hathaway’s (BRK.B) Services and Retail segment has stakes across flight services, electronics, FMCG (fast-moving consumer goods), retail, automotive, and financial services. However, the company hasn’t built up a stake in the e-Commerce industry in or outside the United States. CEO Warren Buffett remains wary of the fact that these acquisitions will come at high multiples, low profits, […]
Visa’s Payments Volumes Could Fuel Its Growth
On July 25, Visa (V) is scheduled to report its results for the third fiscal quarter. Analysts expect Visa to post an EPS of $1.09.
Mastercard’s Q2 Preview: Spending, Macro Data Could Be Drivers
Mastercard (MA) is set to release its second-quarter earnings report on July 26. What can we expect?
Capital One’s Net Interest Margin Fell in the Second Quarter
Capital One Financial (COF) posted second-quarter results on July 19.
American Express in Q2: Drivers Could Be Loan Growth, Spending
On July 18, American Express (AXP) is expected to report its Q2 2018. Analysts expect EPS to be $1.82 compared to $1.86 in the first quarter.
Capital One’s Q2: Expectations Amid Trade Wars, Improved Economy
Capital One (COF) is expected to release its Q2 2018 earnings on July 19. Analysts expect EPS of $2.68, a YoY rise of 38.1%.
What Factors Could Influence Analysts’ Ratings on Discover?
Growing trade tensions are a primary concern, as they could impact the performances of Discover Financial Services (DFS) and its peers.
What Discover Financial Has in Mind Moving Forward
Discover Financial Services (DFS) generated net interest income amounting to $2.1 billion in the first quarter.
What’s behind Mastercard’s Co-Brand Wins?
The economic and business environment prevailing in an economy affects the business fundamentals of payment processing giants like Visa (V) and Mastercard (MA).
How Analysts View American Express Stock
In June, eight of the 32 analysts covering the stock have given it a “buy” rating, and two analysts have given it a “strong sell.”
American Express Global Commercial Services: What Could Impact It
American Express’s (AXP) Global Commercial Services segment’s non-interest revenues rose 9% YoY in the first quarter.
American Express: What the Second Quarter Holds
The second quarter could be beneficial for American Express (AXP) due to an expected rise in consumer loans and transactions.
Understanding Visa’s Service Revenue and Visa Direct
In fiscal Q3 2018, Visa’s (V) service revenue could rise YoY (year-over-year) due to its payment volumes rising YoY in fiscal Q2 2018.
A Look at Visa’s Valuation
Visa’s (V) NTM (next-12-month) and LTM (last-12-month) price-to-book ratios are 7.6x and 8.9x, respectively.
Assessing Visa’s Growth Drivers
Visa’s (V) performance is expected to be primarily driven by spending trends, electronic payment adoption, and tapping into areas where many payments are still made in cash.
Discover Financial Stock: Analysts’ Ratings
For Discover Financial, nine analysts recommend a “strong buy,” eight recommend a “hold,” and ten recommend a “buy” on the stock.
Discover’s Payment Services Division: What to Expect
At the end of the first quarter, Discover Financial’s Payment Services segment saw total volumes of $88.4 billion.
How Banking Stocks Could Perform in the Second Quarter
Amid rising rates, credit offtake is expected to be subdued for bankers in the second quarter.
What to Expect from Berkshire Hathaway’s 1Q18 Earnings
In this series, we’ll look into Berkshire Hathaway’s 1Q18 expected divisional performance along with a variety of other factors.
Improving Operating Leverage Is Key for Bank of America in 2018
Bank of America’s (BAC) spending on technology has increased substantially in recent quarters to improve trading, banking penetration, and wealth services.
Wells Fargo on Buyback Spree to Improve RoE in 2018
Wells Fargo (WFC) spent $2.0 billion on buybacks in 4Q17. For fiscal 2017, the bank spent $6.8 billion in net repurchases for 42.0% growth since 2016.
Wells Fargo’s Litigation Costs Impacting Efficiency and Profits
In 4Q17, Wells Fargo posted employee costs of ~$8.4 billion, a rise of $0.5 billion from 3Q17 on higher salaries, commissions, and year-end bonuses.
Wells Fargo Investment Banking, NIMs, Holdings Help Expansion
Wells Fargo’s non-interest income saw a reversal in 4Q17 with an increase to $9.7 billion compared to $9.4 billion in 3Q17.
Underwriting May Help Berkshire’s Insurance Division
Claims could subside The insurance sector (IYF) faced headwinds and losses in 3Q17 due to hurricanes across the US East Coast. Berkshire Hathaway (BRK.B), AIG (AIG), Prudential Financial (PRU), MetLife (MET), and other reinsurers faced headwinds and underwriting losses in 3Q17, which were partially offset by gains from debt and equity investments. In 4Q17, claims are […]
Major Drivers That Could Impact Bankers in 2018
Banks (IYF) have enjoyed strong credit growth amid near-zero interest rates as leveraging and carry trade have been profitable.
Citigroup’s Institutional Clients Group Could Stay Busy in 2018
Citigroup’s Institutional Clients Group’s net income rose 15% to $3 billion, helped by lower expense growth of 5% and a 9% spike in revenues.
Citigroup’s Global Consumer Banking Sees Rise in Credit Costs
Citigroup’s (C) Consumer Banking segment saw a 3% growth in revenues to $8.4 billion in 3Q17.
Why Wells Fargo’s Spending Could Fall in 2018
Commercial banks and asset managers (IYF) are focusing on technology spending in order to boost their trading activity, improve efficiency, and reduce administrative costs.
Insurance Claims Dent Berkshire’s Profitability in 2017
Berkshire Hathaway (BRK.B) reported losses before tax of $963 million in 3Q17 compared to earnings before taxes of $1.4 billion in the corresponding period last year.
Why Bank Trading Activity Could See Volatility in 2018
Bankers have seen subdued trading activity over the past couple of quarters after a record 2016 and 1Q17.
This Could Be a Key Driver for US Banks in 2018
NIMs (net interest margins) for commercial banks have grown at a faster pace over the past couple of years, resulting in higher net interest income.
Trading to Weigh on Wells Fargo and Other Bankers in 4Q17
Wells Fargo (WFC) missed analysts’ EPS estimate in 3Q17, mainly due to a $1 billion charge for litigation related to its mortgage business pre-2007.
Analysts Are Predicting the Worst Is Over for Wells Fargo
Wells Fargo (WFC) has seen a marginal improvement, with “underperform” ratings declining from five to four and “hold” ratings increasing from 13 to 15.
Why Wells Fargo Is Seeing Marginal Growth in Lending
Wells Fargo (WFC) saw its total loans increase a marginal 1% on a YoY (year-over-year) basis to $952 billion, largely due to a decline in consumer loans.
What Berkshire’s Insurance Business Expects for 3Q17
Berkshire Hathaway Insurance segment is expected to see a YoY rise in revenues due to the sale of policies in automotive, property, and reinsurance offerings.
How Bank of America’s Valuation Compares
Catching up to peers Bank of America (BAC) stock has risen 15.6% over the past six months and 60.1% over the past year, mainly due to improved operating performance supported by credit offtake, rising efficiency, and inflow in its asset management division. This improvement was partially offset by subdued trading over the last couple of quarters. In […]
Understanding Chubb’s North America Agricultural Insurance Division
Chubb’s North America Agricultural Insurance division generated underwriting income of $116.0 million in 1H17 compared to $67.0 million in 1H16, which implies an increase of 73.1%.
What Happened with Chubb’s Life Insurance Division?
In 1H17, Chubb Limited’s (CB) Life Insurance business reported income of $114.0 million in 1H17 compared to $134.0 million in 1H16, reflecting a 14.9% decline.
Inside Chubb’s Overseas General Insurance Division
Chubb’s Overseas General Insurance Division generates the majority of its net premiums written from Latin America, Europe, and Asia.