In today’s dynamic financial landscape, seizing opportunities in fundamentally robust stocks like Globe Life Inc. (GL), Webster Financial Corporation (WBS), and Lazard, Inc. (LAZ) could be prudent, driven by robust analyst projections signaling substantial gains ahead.
The financial sector encompasses a broad spectrum of companies offering diverse services such as investment banking, consumer banking, lending, insurance, and credit card services. While banks play a significant role, they are just one segment within this pivotal sector. Insurance firms, investment entities, fintech startups, and service providers also contribute significantly to the sector's dynamics and innovation.
Crucial to economies worldwide, these entities collectively manage capital across industries, offering pivotal services such as online banking, wealth and investment management, insurance coverage, instant payment solutions, and flexible credit options.
Moreover, the rapid adoption of technology has significantly transformed the financial services industry, streamlining transaction processes and lending mechanisms for improved efficiency. This digital shift has propelled the digital lending platform market, which is expected to reach $34.60 billion by 2028, exhibiting an impressive CAGR of 21.9%.
These innovations are streamlining processes and creating a more intuitive and accessible financial environment that caters to diverse consumer needs. By 2028, the financial services market is projected to expand at a CAGR of 7.6% from 2024 to 2028, resulting in a market volume of $44.92 trillion.
In addition, investors’ interest in financial stocks is evident from the Vanguard Financials ETF’s (VFH) 22.3% returns over the past year. With that in mind, let’s delve deeper into the fundamentals of financial stocks: GL, WBS, and LAZ.
Globe Life Inc. (GL)
GL specializes in life and supplemental health insurance products for middle-income families in the United States. It operates in four segments: Life Insurance; Supplemental Health Insurance; Annuities; and Investments. The company's offerings include whole and term life insurance, Medicare supplements, and various supplemental health insurance plans such as accident and critical illness coverage.
On May 6, the company’s Board of Directors declared a quarterly dividend of $0.24 per share, payable to its shareholders on August 1, 2024. GL’s annual dividend of $0.96 translates to a yield of 1.23% at the current price, while its four-year average dividend yield is 0.81%. Its dividend payments have grown at a CAGR of 6.4% over the past three years and a 7% CAGR over the past five years.
During the fiscal first quarter that ended March 31, 2024, GL’s total revenue increased 7.2% year-over-year to $1.42 billion. Its net operating income grew 6.5% from the year-ago value to $264.09 million. The company’s net income for the quarter amounted to $254.22 million and $2.67 per share, reflecting an increase of 13.7% and 7.1% year-over-year, respectively.
Analysts expect GL’s EPS to increase 10.8% year-over-year to $2.89 for the second quarter (ending June 2024), and its revenue is expected to grow 9.3% year-over-year to $1.45 billion for the same period. Moreover, the company surpassed the consensus EPS estimates in three of the trailing four quarters.
GL’s stock has lost 12.1% over the past month to close the last trading session at $77.89. Wall Street analysts expect the stock to reach $99.90 in the upcoming 12 months, indicating a potential upside of 28.3%.
GL’s stance is apparent in its POWR Ratings. The stock has an overall rating of C, which translates to a Neutral in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has an A grade for Momentum. Among 27 stocks in the Insurance - Life industry, GL is ranked #18. Click here to access additional ratings of GL (Growth, Value, Stability, Sentiment, and Quality).
Webster Financial Corporation (WBS)
WBS serves as the holding company for Webster Bank, National Association, offering various financial products and services across the United States. Its operations are organized into three distinct segments: Commercial Banking; Consumer Banking; and Healthcare Financial Services, catering to both digital and traditional banking needs.
On January 24, 2024, the company acquired Ametros Financial Corporation. Operating under its Ametros and CareGuard brands, Ametros is the nation’s largest professional administrator of medical insurance claim settlements. It helps individuals manage ongoing medical care through its CareGuard service and proprietary technology platform. This acquisition enhances WBS' deposit base with a growing source of low-cost, long-duration deposits and boosts noninterest income diversification.
For the first quarter that ended March 31, 2024, WBS’ total interest income increased 14.6% year-over-year to $951.85 million, while its total non-interest income grew 40.4% from the year-ago value to $99.35 million.
The company’s net income available to common stockholders and earnings per share amounted to $212.16 million and $1.23, respectively. In addition, its net cash from operating activities came in at $243.68 million, an increase of 13.7% from the previous year’s quarter.
WBS’ annual dividend of $1.60 translates to a yield of 4.04% at the current price, compared to the four-year average dividend yield of 3.62%. Its dividend payment has grown at a CAGR of 2.9% over the past five years. On May 16, the company paid a quarterly dividend of $0.40 per share on its common stock.
Street expects WBS’ revenue for the second quarter (ending June 2024) to increase marginally year-over-year to $680.50 million. However, its EPS for the current quarter is expected to decline by 9.5% from the prior year’s period to $1.36.
For the fiscal year 2025, the company’s revenue and EPS are anticipated to grow 6.4% and 11.7% year-over-year to $2.96 billion and $6.26, respectively.
Over the past year, WBS has gained 2% to close the last trading session at $39.64. Wall Street analysts expect the stock to reach $56.91 in the upcoming 12 months, indicating a potential upside of 43.6%.
WBS’ POWR Ratings reflect this outlook. The stock has an overall grade of C, equating to Neutral in our proprietary rating system.
It has a B grade for Momentum. Out of 65 stocks, WBS is ranked #21 in the Northeast Regional Banks industry. To see the other ratings of WBS for Growth, Value, Stability, Sentiment, and Quality, click here.
Lazard, Inc. (LAZ)
LAZ is a financial advisory and asset management firm with operations in North and South America, Europe, the Middle East, Asia, and Australia. The company operates through two main segments: Financial Advisory and Asset Management.
On May 22, the company announced that its Sustainable Private Infrastructure (Lazard SPI) strategy has agreed to acquire 100% ownership of Collective Energy GmbH, an Austrian firm specializing in advisory services and solar generation solutions for commercial customers. This acquisition enhances Lazard SPI's growth and diversification in Europe and builds on its experience with renewable energy platforms like Shawton Energy in the United Kingdom.
With the significant growth potential for behind-the-meter energy generation in Austria, Robert Wall, Head of Sustainable Private Infrastructure at LAM, is confident in Collective Energy's ability to leverage its long-term contracts and diversified revenue base.
On May 17, LAZ paid a dividend of $0.50 per share on its outstanding common stock. The company's four-year average dividend yield is 5.46%, matching its current annual dividend of $2. Its dividend payouts have grown at a 2.1% CAGR over the past three years.
LAZ’s net revenue for the first quarter that ended March 31, 2024, rose 41.1% year-over-year to $764.75 million, with its Financial Advisory segment contributing $454 million to this growth. Its adjusted operating income amounted to $119.54 million, significantly improving from a year-ago loss of $22.95 million.
Likewise, the company’s non-GAAP net income stood at $66.61 million, or $0.66 per share, compared to an adjusted net loss of $22.95 million and $0.26 per share in the same period last year.
The consensus revenue estimate of $652.25 million for the fiscal second quarter (ending June 2024) represents a 5.2% increase year-over-year. The consensus EPS estimate of $0.47 for the current quarter indicates a 94.2% improvement year-over-year. The company has an excellent surprise history, surpassing the consensus revenue and EPS estimates in three of the trailing four quarters.
Shares of LAZ have gained 17% over the past year and 5.3% year-to-date to close the last trading session at $36.65. Wall Street analysts expect the stock to reach $47.80 in the upcoming 12 months, indicating a potential upside of 31.1%.
LAZ’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
It has an A grade for Growth and a B for Momentum and Quality. Within the Investment Brokerage industry, it is ranked #4 of 20 stocks. Click here to access all LAZ ratings for Value, Stability, and Sentiment.
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GL shares were trading at $80.08 per share on Monday afternoon, up $2.19 (+2.81%). Year-to-date, GL has declined -33.94%, versus a 15.67% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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