The financial sector is flourishing due to the high demand for financial services from businesses and individuals. The rising consumer demand for insurance and loans further fuels the industry's growth.
Given this backdrop, it could be wise to consider fundamentally strong financial stocks such as Hamilton Insurance Group, Ltd. (HG), CNB Financial Corporation (CCNE), and Mid Penn Bancorp, Inc. (MPB), which are undervalued but poised for a comeback.
The rising consumer demand for insurance and loans is fueling the financial services industry in the United States. Globalization and urbanization are contributing to the growing demand for end-user investments. Additionally, global economic growth is driving the increased need for financial services.
The United States financial services market is expected to grow at a CAGR of 7.5% by 2032.
Additionally, the increasing awareness of insurance products in emerging markets, along with a rising demand for a variety of insurance plans, is driving market growth. This growth is further supported by the growing elderly population looking for health insurance coverage. The reinsurance market is expected to grow at a CAGR of 13.5% by 2028.
Given these favorable industry trends, let’s look at the fundamentals of the top financial stocks with strong dividend yields.
Hamilton Insurance Group, Ltd. (HG)
HG underwrites specialty insurance and reinsurance risks in Bermuda and internationally. The company operates the Hamilton Global Specialty, Hamilton Select, and Hamilton Re underwriting platforms.
In terms of forward non-GAAP P/E, HG is trading at 5.03x, 58.5% lower than the industry average of 12.13x. Likewise, the stock’s forward EV/Sales and Price/Sales multiples of 0.45 and 0.83 are 85.9% and 71.3% lower than their respective industry averages of 3.18 and 2.91.
For the first quarter that ended March 31, 2024, HG’s net premium earned increased 34.2% year-over-year to $385.30 million. The company’s net income attributable to common shareholders increased 205.2% year-over-year to $157.17 million. Additionally, its income per share attributable to common shareholders increased 181.6% year-over-year to $1.38.
Street expects HG’s revenue for the year (ending December 2024) to increase 45% year-over-year to $2.28 billion. Its EPS for the same year is expected to grow 39.7% year-over-year to $3.41.
HG’s stock has gained 25% over the past three months to close the last trading session at $16.89.
HG’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy 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 and Sentiment and a B for Growth and Value. HG is ranked first among nine stocks in the A-rated Insurance - Reinsurance industry.
Click here to access additional HG ratings (Quality and Stability).
CNB Financial Corporation (CCNE)
CCNE operates as the bank holding company for CNB Bank that provides a range of banking products and services for individual, business, governmental, and institutional customers.
In terms of forward non-GAAP P/E, CCNE is trading at 11.54x, 4.9% lower than the industry average of 12.13x. Likewise, the stock’s forward Price/Book multiple of 1 is 18.4% lower than their respective industry average of 31.23.
CCNE’s net interest income for the first quarter, which ended June 30, 2024, was reported at $45.72 million. Its net income came in at $12.96 million and $0.56 per share. In addition, as of June 30, 2024, the company’s total assets stood at $5.89 billion, compared to $5.66 billion as of June 30, 2023.
Analysts expect CCNE’s EPS for the third quarter ending September 2024 to be $0.58. Its revenue for the same quarter is expected to be $46.80 million. The company has surpassed EPS estimates in each of the trailing four quarters.
CCNE’s stock has gained 25.1% over the past month to close the last trading session at $25.54.
CCNE’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.
CCNE has an A grade for Sentiment and a B for Momentum, Value, and Stability. It is ranked #3 in the Mid-Atlantic Regional Banks industry.
In addition to the POWR Ratings we’ve stated above, we also have CCNE ratings for Quality and Growth. Get all CCNE ratings here.
Mid Penn Bancorp, Inc. (MPB)
MPB operates as the bank holding company for Mid Penn Bank and provides commercial banking services to individuals, partnerships, non-profit organizations, and corporations. The company offers various time and demand deposit products, including checking accounts, savings accounts, clubs, money market deposit accounts, certificates of deposit, and individual retirement accounts.
In terms of forward non-GAAP P/E, MPB is trading at 10.80x, 10.9% lower than the industry average of 12.13x. Likewise, the stock’s forward Price/Book multiple of 0.82 is 33.4% lower than their respective industry average of 1.23.
MPB’s total interest income for the fiscal fourth quarter ended December 31, 2023, came in at $37 million. Its net income available to shareholders was reported at $12.10 million and $0.62 per share.
Street expects MPB’s revenue for the third quarter ending September 2024 to increase marginally year-over-year to $43.10 million. Its EPS is expected to increase 8.8% year-over-year to $0.86 for the same quarter. The company has surpassed revenue and EPS estimates in three of the trailing four quarters.
MPB’s stock has gained 22.9% over the past six months to close the last trading session at $28.26.
MPB’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has an A grade for Sentiment and a B for value, Stability, and Momentum. Within the Mid-Atlantic Regional Banks industry, MPB is ranked #5.
Click here to access additional ratings of MPB for Growth and Quality.
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HG shares were trading at $17.29 per share on Tuesday afternoon, up $0.40 (+2.37%). Year-to-date, HG has gained 15.65%, versus a 14.62% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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