Financial providers use their expertise in capital allocation and risk assessment to help facilitate economic growth while offering consumers and businesses essential financial services. But uncertainty about fiscal and monetary policy has tempered enthusiasm, limiting the industry's gains to 20.7% over the past six months. This return lagged the S&P 500's 24.7% climb.
A cautious approach is imperative when dabbling in financials as many are sensitive to economic cycles and regulatory changes. With that said, here are three financials stocks we’re swiping left on.
T. Rowe Price (TROW)
Market Cap: $22.58 billion
Founded in 1937 by Thomas Rowe Price Jr., who pioneered the growth stock investing approach, T. Rowe Price (NASDAQ: TROW) is an investment management firm that offers mutual funds, advisory services, and retirement planning solutions to individuals and institutions.
Why Are We Cautious About TROW?
- Muted 4.2% annual revenue growth over the last five years shows its demand lagged behind its financials peers
- Annual earnings per share growth of 1.3% underperformed its revenue over the last five years, showing its incremental sales were less profitable
T. Rowe Price is trading at $102.76 per share, or 10.1x forward P/E. If you’re considering TROW for your portfolio, see our FREE research report to learn more.
HA Sustainable Infrastructure Capital (HASI)
Market Cap: $3.50 billion
With a proprietary "CarbonCount" metric that quantifies the environmental impact of each dollar invested, HA Sustainable Infrastructure Capital (NYSE: HASI) is an investment firm that finances and develops climate-positive infrastructure projects across renewable energy, energy efficiency, and ecological restoration.
Why Does HASI Give Us Pause?
- Performance over the past five years shows its incremental sales were less profitable, as its 8.4% annual earnings per share growth trailed its revenue gains
- ROE of 7.8% reflects management’s challenges in identifying attractive investment opportunities
At $28.24 per share, HA Sustainable Infrastructure Capital trades at 10x forward P/E. Dive into our free research report to see why there are better opportunities than HASI.
Encore Capital Group (ECPG)
Market Cap: $991.1 million
Operating in the often misunderstood world of debt collection since 1999, Encore Capital Group (NASDAQ: ECPG) purchases portfolios of defaulted consumer debt at deep discounts and works with individuals to recover these obligations while helping them toward financial recovery.
Why Does ECPG Fall Short?
- Flat sales over the last five years suggest it must find different ways to grow during this cycle
- Earnings per share fell by 49% annually over the last five years while its revenue was flat, showing each sale was less profitable
- High net-debt-to-EBITDA ratio of 13× increases the risk of forced asset sales or dilutive financing if operational performance weakens
Encore Capital Group’s stock price of $43.07 implies a valuation ratio of 6.5x forward P/E. Check out our free in-depth research report to learn more about why ECPG doesn’t pass our bar.
Stocks We Like More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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