Financial institutions play a critical role, offering everything from consumer banking to wealth management and specialized financial solutions. Still, investors are uneasy as companies face challenges from an unpredictable interest rate and inflation environment. These doubts have certainly contributed to the indutry's recent underperformance - over the past six months, its 2.2% gain has fallen behind the S&P 500's 9.9% rise.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. With that said, here is one financials stock poised to generate sustainable market-beating returns and two that may face trouble.
Two Financials Stocks to Sell:
Voya Financial (VOYA)
Market Cap: $7.09 billion
Originally spun off from Dutch financial giant ING in 2013 and rebranded with a name suggesting "voyage," Voya Financial (NYSE: VOYA) provides workplace benefits and savings solutions to U.S. employers, helping their employees achieve better financial outcomes through retirement plans and insurance products.
Why Do We Think Twice About VOYA?
- Annual revenue growth of 6.8% over the last two years was below our standards for the financials sector
- Incremental sales over the last two years were less profitable as its 4.1% annual earnings per share growth lagged its revenue gains
- Tangible book value per share tumbled by 14.6% annually over the last five years, showing financials sector trends are working against its favor during this cycle
At $74.49 per share, Voya Financial trades at 7.8x forward P/E. Read our free research report to see why you should think twice about including VOYA in your portfolio.
Credit Acceptance (CACC)
Market Cap: $4.89 billion
Founded in 1972 by Donald Foss to serve customers overlooked by traditional lenders, Credit Acceptance (NASDAQ: CACC) provides auto financing solutions that enable car dealers to sell vehicles to consumers with limited or impaired credit histories.
Why Do We Steer Clear of CACC?
- Muted 2.9% annual revenue growth over the last five years shows its demand lagged behind its financials peers
- Incremental sales over the last two years were much less profitable as its earnings per share fell by 5.4% annually while its revenue grew
- Debt-to-equity ratio of 3.9× shows the firm has taken on excessive debt, leaving little room for error
Credit Acceptance’s stock price of $439.71 implies a valuation ratio of 11x forward P/E. Dive into our free research report to see why there are better opportunities than CACC.
One Financials Stock to Buy:
Ares (ARES)
Market Cap: $35.61 billion
With roots in the leveraged finance group of Apollo Management, Ares Management (NYSE: ARES) is an alternative investment firm that manages private equity, credit, real estate, and infrastructure assets for institutional and high-net-worth clients.
Why Are We Backing ARES?
- Impressive 19.2% annual revenue growth over the last five years indicates it’s winning market share this cycle
- 33.6% annual growth in fee-related earnings over the last five years shows the firm optimized its expenses
- Earnings growth has comfortably beaten the peer group average over the last five years as its EPS has compounded at 17.9% annually
Ares is trading at $161.62 per share, or 26.7x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free for active Edge members.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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