When a company holds a high P/E Ratio this illustrates that investors have high expectations relative to a firm’s earnings growth potential. By the same token, when a firm has a low P/E Ratio (X<10) this demonstrates that investors have low earnings expectations of the firm. In its most simple form, this ratio is telling someone how much investors are willing to pay currently for every dollar’s worth of earnings from a company.
We ran a screen for financial firms that appear cheap relative to their P/E Ratio (X<10). From this narrowed pool, we then screened for companies that had strong profitability (X>10).
The list is ranked from highest to lowest by the P/E Ratio.
1. American Capital Ltd (ACAS)
Sector | Financial Services |
Industry | Asset Management |
Market Cap | $2,696M |
Beta | 2.53 |
This is a venture capital & private equity firm. The firm's P/E Ratio is 1.97. ACAS’s 1-Year Fiscal Operating Margin is 34.00%. The short interest is 1.40% as of 08/15/2011.
2. American International Group (AIG)
Sector | Financial Services |
Industry | Insurance - Diversified |
Market Cap | $41,357M |
Beta | 3.99 |
The company deals with a variety of insurance and insurance-related activities all over the world. The firm’s P/E Ratio is 2.23. AIG’s 1-Year Fiscal Operating Margin is 23.20%. The short interest is 17.20% as of 08/15/2011.
3. Allied World Assurance Company (AWH)
Sector | Financial Services |
Industry | Insurance - Property & Casualty |
Market Cap | $ 1,925M |
Beta | 0.38 |
The company underwrites and manages a diversified portfolio of property and casualty insurance and reinsurance business. The firm’s P/E Ratio is 4.86. AWH’s 1-Year Fiscal Operating Margin is 36.61%. The short interest is 2.60% as of 08/15/2011.
4. Protective Life Corp (PL)
Sector | Financial Services |
Industry | Insurance - Life |
Market Cap | $ 1,463M |
Beta | 3.37 |
The company offers insurance and investment products. The firm’s P/E Ratio is 4.89. PL’s 1-Year Fiscal Operating Margin is 12.55%. The short interest is 3.10% as of 08/15/2011.
5. Hartford Financial Services Group (HIG)
Sector | Financial Services |
Industry | Insurance - Diversified |
Market Cap | $ 7,590M |
Beta | 3.45 |
The company offers insurance and financial services company. The firm’s P/E Ratio is 5.46. HIG’s 1-Year Fiscal Operating Margin is 12.10%. The short interest is 4.60% as of 08/15/2011.
6. Lincoln National Corp (LNC)
Sector | Financial Services |
Industry | Insurance - Life |
Market Cap | $ 5,865M |
Beta | 2.77 |
The company operates multiple insurance and investment management businesses. The firm’s P/E Ratio is 5.55. The firm’s 1-Year Fiscal Operating Margin is 11.86%. The short interest is 3.10% as of 08/15/2011.
7. Reinsurance Group of America (RGA)
Sector | Financial Services |
Industry | Insurance - Reinsurance |
Market Cap | $ 3,548M |
Beta | 1.22 |
The company offers insurance and financial reinsurance. The firm’s P/E Ratio is 5.76. The firm’s 1-Year Fiscal Operating Margin is 10.46%. The short interest is 1.10% as of 08/15/2011.
8. Janus Capital Group, Inc.(JNS)
Sector | Financial Services |
Industry | Asset Management |
Market Cap | $1,114M |
Beta | 2.85 |
The company offers investment management services. The firm’s P/E Ratio is 6.13. The firm’s 1-Year Fiscal Operating Margin is 27.72%. The short interest is 3.60% as of 08/15/2011.
9. Apollo Investment Corp (AINV)
Sector | Financial Services |
Industry | Asset Management |
Market Cap | $ 1,589M |
Beta | 1.87 |
The company operates as a closed-end management investment firm and does business development. The firm’s P/E Ratio is 6.16. The firm’s 1-Year Fiscal Operating Margin is 53.28%. The short interest is N/A as of 08/15/2011.
We hope this list helps as investors do their own due diligence on financial stocks that appear cheap and profitable.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
