1 / 14

FIN824 The Stock Market Financials Sector

FIN824 The Stock Market Financials Sector. Kyle M. Ward-Dahl Marsel J. Tadger Ke Wang Adam J. Wilson. Index & SIM Weights. Growth in S&P 500’s financials sector Increasing underweighting of SIM. Size and Composition. Market Cap: 1.6 Trillion

tynice
Télécharger la présentation

FIN824 The Stock Market Financials Sector

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. FIN824 The Stock MarketFinancials Sector Kyle M. Ward-Dahl Marsel J. Tadger Ke Wang Adam J. Wilson FIN824 The Stock Market

  2. Index & SIM Weights • Growth in S&P 500’s financials sector • Increasing underweighting of SIM FIN824 The Stock Market

  3. Size and Composition • Market Cap: 1.6 Trillion • 14.71% of S&P 500 • Industries • Banks • Consumer Finance • Diverse Financial Service • Insurance • Multi-sector Holdings • Real Estate Investment Trust • Largest Companies (Market Cap in Billions) • American Express (AXP) $44.8 • Bank of American (BAC) $150.8 • Berkshire Hathaway (BRK) $234.6 • Citigroup (C) $93.8 • Goldman Sachs (GS) $76.5 • Bank of NY Mellon (BK) $35 • JP Morgan Chase & Co (JPM) $153.4 • Morgan Stanley (MS) $36.4 • U.S. Bancorp (USB) $48 • Wells Fargo (WFC) $145.3 FIN824 The Stock Market

  4. Sector Performance • Revenue increased by 8% in latest Qtr • Earnings per share increased by 256% in latest Qtr and 644% in latest 12 months • A strong rebound in terms of earnings per share FIN824 The Stock Market

  5. Business Analysis • This sector is in the mature stage of its life cycle • Financials are cyclical • Influenced by economic conditions and conditions in financial markets • Regulations are also an important factor • Interest rate rise has negative impact FIN824 The Stock Market

  6. Financial Analysis • L-T Future Growth Rate for Earning per share is 8% • Sector Sales are still extremely down from pre-crises numbers possibly indicating upside • Compared with historic numbers, margins are still low in the sector FIN824 The Stock Market

  7. Valuation Analysis - P/B FIN824 The Stock Market

  8. Valuation Analysis - P/E P/Trailing E P/Forward E FIN824 The Stock Market

  9. Valuation Analysis - P/S & P/CF P/S P/CF FIN824 The Stock Market

  10. Valuation Summary • Current P/E and P/CF ratios are way higher than the median • Current P/B and P/S ratios are much lower than median • For financial institutions, P/B is important because most assets and liabilities are valued at market values. • From this perspective, the sector is cheaper than usual FIN824 The Stock Market

  11. GDP Forecast FIN824 The Stock Market

  12. Opportunities & Risks • Upside • GDP growth • Sales & earnings growth • Market rebound • Downside • Liability tax bill • Interest rate rise • Uncertainties such as other regulations FIN824 The Stock Market

  13. Recommendations • The conditions in financials sector has improved and sales & earnings are growing. The percentage of this sector in S&P500 also grew by about 0.4%. All these signals demonstrate the market rebound. • Future growth is also expected in the sector and the whole market as well, showing the increasing confidence of investors and analysts. • However, the uncertainties and risks are not negligible. • We recommend to buy 200 basis points to bring SIM weighting relative to S&P500 to 13.10%. As a result, SIM will be underweight in this sector by 1.61%. Thus, SIM can gain from the growth of financials sector and also avoid risks to certain extent. FIN824 The Stock Market

  14. Q&A FIN824 The Stock Market

More Related