Screen the sector where balance-sheet quality, not the income statement, decides the winners.
Financials cover banks, insurers, asset managers and payment processors — businesses that earn a spread or a fee on other people’s money. Because the balance sheet itself is the product, screening here leans on capital adequacy and returns on equity rather than the revenue-growth metrics that dominate other sectors, and a rate cycle can swing sector-wide earnings almost overnight.
Illustrative — not investment advice.
| Ticker | Company | Sub-industry |
|---|---|---|
| BRK.B | Berkshire Hathaway | Diversified insurance & holding company |
| JPM | JPMorgan Chase | Diversified banking |
| V | Visa | Payment networks |
| MA | Mastercard | Payment networks |
| BAC | Bank of America | Diversified banking |
| WFC | Wells Fargo | Diversified banking |
| GS | Goldman Sachs | Investment banking & trading |
| MS | Morgan Stanley | Investment banking & wealth management |
| SPGI | S&P Global | Credit ratings & financial data |
| BLK | BlackRock | Asset management |
| AXP | American Express | Payments & consumer credit |
| C | Citigroup | Diversified banking |
ROE is the core profitability yardstick for banks and insurers, showing how efficiently a franchise turns shareholder capital into earnings.
For lenders, the spread between what they earn on assets and pay on deposits drives the bulk of earnings — a key filter as rate cycles turn.
Book value anchors bank and insurer valuation in a way earnings multiples don’t; screening on P/B flags franchises trading cheap relative to tangible capital.
Capital adequacy is the buffer against a bad cycle; a strong ratio screens out banks one downturn away from raising dilutive capital.
As policy rates move, net interest margins for banks and float income for insurers move with them, making the sector unusually sensitive to the interest-rate outlook.
Card networks keep taking share from cash across emerging markets, compounding transaction volume with minimal incremental capital.
Scale advantages in technology and compliance costs are pushing smaller lenders toward mergers, concentrating deposits among larger, better-capitalised franchises.
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Add a sector filter, then stack valuation, quality, growth and income filters with ≥, ≤ and range operators to match your thesis.
Open any survivor for a DCF you control, then save it to a watchlist with a margin-of-safety target so each name carries an undervalued / fair / rich signal.
Screen for strong return on equity, healthy net interest margin (for lenders), reasonable price-to-book and solid capital ratios. Together these flag well-capitalised franchises earning durable returns rather than banks chasing growth with thin buffers.
Open any ticker in Lemma Analysis and the DCF is pre-filled from years of financials, adapted for how financial firms actually generate cash. Adjust growth, margins and WACC, then run a reverse DCF to see what earnings growth the current price assumes.
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A bank or insurer’s balance sheet — its loans, securities and reserves — is close to its actual business, unlike, say, a software company whose value is mostly intangible. That makes book value a more reliable valuation anchor here than in most sectors.
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