Five financial stocks to watch in Q3: FHN, Y, WRB, LPLA & PGR

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Five financial stocks to watch in Q3: FHN, Y, WRB, LPLA & PGR

Five financial stocks to watch in Q3: FHN, Y, WRB, LPLA & PGR
Image source: © Marekskies | Megapixl.com
Highlights:
  • First Horizon Corporation (NYSE: FHN) stock has a dividend yield of 2.71%.
  • Alleghany (NYSE: Y) shareholders approved its purchase by Berkshire Hathaway Inc.
  • W.R. Berkley Corp (NYSE: WRB) pays an annualized dividend of US$0.347.

The S&P 500 Financials Sector Index fell over 19% YTD as a loose covid-era monetary policy exacerbated inflation. The May CPI in the US climbed to 8.6%, reaching a fresh 4-decade high. 

The technology sector has been the hardest hit as interest rate hike fears loomed. To blunt the inflation impact, companies are considering new services and promotional schemes. 

For e.g., last week, Apple Inc. (AAPL) announced the ‘Buy Now, Pay Later’ scheme in collaboration with Mastercard (MA). It will allow customers using Apple Pay services to pay in four equal installments without interest or late fees.

Generally, banks, brokerage, insurance and other financial sector firms benefit from a high-interest rate environment. Here we discuss five large-cap financial stocks that returned YTD gains.

First Horizon Corporation (NYSE: FHN)

Closing price on June 10: US$22.14

Memphis, Tennessee-based First Horizon Corp is the parent company of First Tennessee Bank. 

The First Tennessee Bank has over 200 branches generating around 65% of revenue. Around 25% come from the capital market, and 10% from non-strategic, corporate activities.

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 For the quarter ended March 31, 2022, its total interest income was US$510 million and the net income attributable to common shareholders was US$187 million or EPS diluted of US$0.34. 

In the same quarter a year ago, the total interest income and the net income for common shareholders were US$552 million and US$225 million, respectively.

First Horizon has a market capitalization of US$11.57 billion and a P/E ratio of 12.88. Its forward P/E for one year is 14.66, the dividend yield is 2.71%, and the annualized dividend is US$0.60.

The stock traded in the range of US$24.24 to US$14.67 in the last 52 weeks.

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Five financial stocks to watch in Q3: FHN, Y, WRB, LPLA & PGR

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Alleghany Corporation (NYSE: Y)

Closing price on June 10: US$834.11

New York-based Alleghany is a property and casualty insurance company with various subsidiaries. Its three reporting segments are reinsurance, insurance, and Alleghany Capital. 

On June 9, it announced the shareholders’ approval for a merger with Berkshire Hathaway Inc. (BRK.A and BRK.B). Berkshire will acquire the company for US$848.02 per share in cash.

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For the quarter ended March 31, 2022, its revenue was US$2.72 billion compared to US$2.65 billion in the same quarter of 2021. 

The net income came in at US$125.68 million or US$9.29 per share diluted compared to US$230 million or US$16.37 per share diluted in the March quarter of the previous year.

The stock has a market capitalization of US$11.2 billion and a P/E ratio of 12.35. It traded in the price range of US$862.87 to US$585.10 in one year.

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W.R. Berkley Corporation (NYSE: WRB)

Closing price on June 10: US$68.26 

W.R. Berkley is an insurance holding company based in Greenwich, Connecticut. Its 

subsidiaries are engaged in commercial casualty insurance such as workers' compensation insurance, reinsurance, etc.

The company generated a revenue of US$2.91 billion for the quarter ended March 31, 2022, compared to US$2.16 billion for the same quarter a year ago. 

Its net income was US$590.6 million or US$2.12 per diluted share compared to US$229.5 million or US$0.82 per diluted share in the previous year’s March quarter.

The stock has a market capitalization of US$17.79 billion and a P/E ratio of 13.52. Its forward P/E for one year is 17.50, the dividend yield is 0.51%, and the annualized dividend is US$0.347.

WRB stock traded in the range of US$72.31 to US$47.13 in the last 52 weeks.

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LPL Financial Holdings Inc. (NASDAQ: LPLA)

Closing price on June 10: US$188.65

LPL Financial Holdings is an independent broker based in San Diego, California. It offers a proprietary technology platform to financial advisors and institutions for brokerage and investment advisory services. The company had roughly 20,000 advisors at the end of 2021.

The company booked total revenue of US$2.07 billion for the March quarter of 2022, compared to US$1.71 billion in the previous year. 

Its net income was US$133.7 million or US$1.64 per share diluted compared to US$129.6 million or US$1.59 per share diluted in the March quarter of 2021.

The stock has a market capitalization of US$14.37 billion. It has a P/E ratio of 31.63, and the forward P/E for one year is 19.47. The stock's dividend yield is 0.53, with an annualized dividend of US$1.0. 

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Five financial stocks to watch in Q3: FHN, Y, WRB, LPLA & PGR© PixMarket | Megapixl.com

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Progressive Corporation (NYSE: PGR)

Closing price on June 10: US$102.00 

Ohio-based Progressive underwrites private and commercial auto insurance and specialty lines. The company has more than 20 million active personal auto policies.

For the March quarter of 2022, the company earned revenue of US$11.8 billion compared to US$10.4 billion in the same quarter the previous year. 

Its net income was US$313.9 million or US$0.52 per share diluted compared to US$1,480 million or US$2.51 per diluted share in the last year's March quarter.

The stock has a market capitalization of US$67.11 billion and a P/E ratio of 31.18. Its forward P/E for one year is 23.86, the dividend yield is 0.35%, and the annualized yield is US$0.40.

The stock traded in the range of US$121.36 to US$89.35 in the last 52 weeks.

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Bottom line:

The stock market is prone to volatility. Hence, investors should carefully evaluate the stocks before investing in the share market.

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