Top 15 Financial Services Companies With the Strongest Businesses
Marvin's rules picked 15 Financial Services companies with the highest Business Quality scores in their industries. They include asset managers, banks, insurers and payment companies. Each pick below shows its key figures and one caution.
Financial Services covers many kinds of companies, including banks, insurers, asset managers, brokers and payment networks. A strong business in this sector usually earns healthy profits from its revenue, makes good use of shareholders' money and does not lean too heavily on debt. This list looks at those traits through Marvin's scores and a few simple financial figures.
The 15 stocks below are ordered mainly by Marvin's Business Quality score. That score measures the business itself, not how its stock is priced. Some companies here have a very high quality score but a much lower opportunity score, so a strong business and a high overall score are not the same thing.
Keep in mind that the figures come from the last fiscal year and a single year can mislead. Banks and insurers also report their finances differently from other companies, so some figures, such as operating margin or debt-to-equity, are missing for several picks. Treat this list as a starting point for research, not a recommendation.
The list
How Marvin ranked these stocks
Marvin included companies above about three hundred million dollars in size from the Financial Services sector. They are ranked by Business Quality score, highest first, with at most four companies per industry. All Marvin scores run on a scale out of one hundred and are relative to each company's own industry, so a score compares a company with its industry peers today. It does not compare it with the whole market.
Companies above about $300 million in size, ranked by Marvin scores (0-100, relative to each company's own industry). The Financial Services sector, highest Business Quality score first; at most 4 per industry.
The stocks, one by one
Victory Capital Holdings, Inc. VCTR
Victory Capital, an asset manager, shows revenue growth of 46.2% and an operating margin of 41.3%, which suggests fast expansion and strong profitability. Return on equity is 19.4%, and debt-to-equity is 0.43. Caution: free cash flow margin is not available, so cash generation is unclear.
Independent Bank Corp. INDB
Independent Bank Corp., a regional bank, grew revenue by 24.3% and earned a return on equity of 7.7%. That is solid growth with a moderate return. Caution: that return is modest next to many peers on this list, and operating margin and debt figures are not available.
UMB Financial Corporation UMBF
UMB Financial grew revenue by 62.8% and has an operating margin of 40.8%, with return on equity of 11.7%. Debt-to-equity is a very low 0.06. Caution: its opportunity score of 60 is well below its quality score of 96.
Cincinnati Financial Corporation CINF
Cincinnati Financial, a property and casualty insurer, has an operating margin of 29.8% and return on equity of 20.0%, both strong. Debt-to-equity is just 0.05. Caution: revenue growth of 11.4% is steady rather than fast compared with the quicker growers here.
Visa Inc. V
Visa has an operating margin of 61.1% and return on equity of 62.4%, which are very strong figures. Revenue grew 11.3% and debt-to-equity is 0.67. Caution: its opportunity score of 67 is the lowest on this list, even though its quality score is high.
German American Bancorp, Inc. GABC
German American Bancorp grew revenue by 37.8% and has an operating margin of 35.3%, showing healthy growth and profitability for a regional bank. Return on equity is 11.7%. Caution: no debt-to-equity figure is available, so its borrowing level can't be judged here.
BlackRock, Inc. BLK
BlackRock, an asset manager, has an operating margin of 32.6% and grew revenue by 18.7%, with debt-to-equity of 0.26, which is fairly low. Caution: return on equity of 11.4% is only moderate, and its opportunity score of 59 is middling.
First Financial Bankshares, Inc. FFIN
First Financial Bankshares has an operating margin of 49.3%, a high figure for a bank, and return on equity of 13.5%. Revenue grew 14.7%. Caution: debt-to-equity is not available, and its opportunity score of 44 is much lower than its quality score.
Berkshire Hathaway Inc. BRK-B
Berkshire Hathaway, a diversified insurer, has return on equity of 11.5%, a decent but not standout figure. Caution: revenue growth was just 0.0%, essentially flat, and operating margin and debt figures are not available. This is the same company as BRK-A.
The Charles Schwab Corporation SCHW
Charles Schwab, a capital markets firm, has an operating margin of 50.2% and return on equity of 20.1%, both strong. Revenue grew 22.0%, and debt-to-equity is 0.45. Caution: its opportunity score of 52 is only middling next to its quality score.
Brookfield Asset Management Ltd. BAM
Brookfield Asset Management grew revenue by 21.0% and earned a return on equity of 33.4%, pointing to good growth and efficient use of shareholder money. Debt-to-equity is 0.44. Caution: operating margin is not available, so profitability on sales can't be checked.
Hercules Capital, Inc. HTGC
Hercules Capital has an operating margin of 63.0% and return on equity of 16.8%, both strong. Caution: revenue growth was a modest 7.9%, and debt-to-equity of 1.03 is higher than most companies on this list.
Slide Insurance Holdings, Inc. Common Stock SLDE
Slide Insurance, a property and casualty insurer, shows revenue growth of 36.5%, an operating margin of 52.8% and return on equity of 46.5%, with very low debt-to-equity of 0.03. Caution: these are one year's results, and a single year can swing.
Berkshire Hathaway Inc. BRK-A
Berkshire Hathaway's other share class shows the same business figures: return on equity of 11.5% and revenue growth of only 0.0%, which is essentially flat. Caution: operating margin and debt figures are not available, so profitability and borrowing are harder to judge.
Mastercard Incorporated MA
Mastercard has an operating margin of 58.3% and revenue growth of 16.4%, which are strong. Return on equity is an extraordinary 289.7%. Caution: debt-to-equity of 4.39 is the highest on this list, so its borrowing deserves a closer look.
Common questions
What does the Business Quality score measure?
It is a Marvin score out of one hundred that describes how strong a company's business looks compared with other companies in its own industry. It reflects traits such as profitability and growth, not whether the stock is a good buy.
Why are some figures missing for banks and insurers?
Banks and insurers report their finances differently from most companies, so measures such as operating margin or debt-to-equity are sometimes not available in the data. This article only uses figures marked as available for each stock.
Why is Berkshire Hathaway listed twice?
BRK-A and BRK-B are two share classes of the same company, so they share the same business figures. Their Marvin scores differ slightly, which is why both appear in the list.
Keep reading
- Top 20 Insurance Stocks Ranked by Marvin Scores
- Top 25 Good Companies That Could Be About to Break Out
- Top 15 Financial Services Stocks by Marvin's Opportunity Score
- Top 15 Financial Services Stocks Right Now
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Marvin's scores (0-100) compare each company with others in its industry today. Growth and margin figures come from SEC filings. This is general information, not personal investment advice or a recommendation to buy or sell anything. Do your own research.