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Quarter-End Insights

Our Outlook for Financial Services Stocks

The good, the bad, and the ugly.

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The Good
Data-processing companies have been unfairly beaten up in the third quarter, in our view. We think most processors have some nice qualities like solid and fairly stable free cash flow, asset-light business models, clean balance sheets, and recurring revenue streams. But by Dec. 15, the segment was punished with the rest of the market as the price of the stocks in the sector went down, on average, about 26%, slightly more than the entire S&P 500. When the tide goes out all ships fall in proportion, it seems.

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Jim Ryan does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.