Financial services companies are poised to do well, and this is one company that should be on your watchlist.

I am very bullish on the U.S. economy.  It has been expanding over the past several quarters.  Employment is up.  The Federal Reserve Chairwoman, Janet Yellen, has even declared that the economy has gone beyond full employment; the Fed has been pushing up interest rates.  Incomes are increasing.  Prices are moving upward nearing target levels.  

Financial stocks will do well in an environment like such as that.  Banks have more room to work with from a wider interest rate differential.  That is what gets me excited about the financial sector.  But, what about brokerages and wealth-management?  How would they fare in an economic landscape as this?  Quite well, as it turns out.  

Published over a year ago
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Reviewed by Vlad Skutelnik

Financial services companies are going to do well going forward with the expansion in the economy.  This wealth-management company will do very well considering that with increased incomes that Americans are seeing they will want to invest more and more going forward.  

Out of tens of thousands of stocks, funds, and ETFs that trade on global exchanges each represent an individual company which you can analyze using comparative analysis. To determine which one of the two entities, such as AmerisourceBergen or Diageo is a better fit for your portfolio, analyzing a few basic fundamental indicators is a good first step.

understanding AmerisourceBergen dividends

A dividend is the distribution of a portion of AmerisourceBergen earnings, decided and managed by the company's board of directors and paid to a class of its shareholders. Note, announcements of dividend payouts are generally accompanied by a proportional increase or decrease in a company's stock price. AmerisourceBergen dividend payments follow a chronological order of events, and the associated dates are important to determine the shareholders who qualify for receiving the dividend payment. AmerisourceBergen one year expected dividend income is about USD0.95 per share.
Investing in dividend-paying stocks, such as AmerisourceBergen is one of the few strategies that are good for long-term investment. Ex-dividend dates are significant because investors in AmerisourceBergen must own a stock before its ex-dividend date to receive its next dividend.
This type of analysis is very useful when you want to generate a past dividend schedule and payout information for AmerisourceBergen. Then that information in the form of graph and calendar can be used to fully explain how Du Pont dividends can provide a real clue to its valuation.

How important is AmerisourceBergen's Liquidity

AmerisourceBergen financial leverage refers to using borrowed capital as a funding source to finance AmerisourceBergen ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. AmerisourceBergen financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to AmerisourceBergen's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of AmerisourceBergen's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between AmerisourceBergen's total debt and its cash.

Correlation Between AmerisourceBergen and Diageo PLC ADR

In general, Delisted Stock analysis is a method for investors and traders to make individual buying and selling decisions. Stock correlation analysis is also essential because it can help investors realize that they may not be as diversified as they think. Risk management strategies are usually required to make sure all portfolios are properly aligned against their risk tolerance level. You can consider holding AmerisourceBergen together with similar or unrelated positions with a negative correlation. For example, you can also add Diageo PLC to your portfolio. If Diageo PLC is not perfectly correlated to AmerisourceBergen it will diversify some of the market risks out of the positively correlated stocks in your portfolio. However, the disadvantage of this sort of hedging is that it can potentially affect your investment returns throughout market cycles. When AmerisourceBergen, for example, performs excellent and delivers stable returns, the negatively correlated position you locked in as a hedge may drag your returns down.
Are you currently holding both AmerisourceBergen and Diageo PLC in your portfolio? Please note if you are using this as a pair-trade strategy between AmerisourceBergen and Diageo PLC, watch out for correlation discrepancy over time. Relying on the historical price correlations and assuming that it will not change may lead to short-term losses. Please check pair correlation details between ABC and DEO for more information.

Breaking down AmerisourceBergen Further

AllianceBernstein.

I am very bullish on the U.S. economy.  It has been expanding over the past several quarters.  Employment is up.  The Federal Reserve Chairwoman, Janet Yellen, has even declared that the economy has gone beyond full employment; the Fed has been pushing up interest rates.  Incomes are increasing.  Prices are moving upward nearing target levels.  

Financial stocks will do well in an environment like such as that.  Banks have more room to work with from a wider interest rate differential.  That is what gets me excited about the financial sector.  But, what about brokerages and wealth-management?  How would they fare in an economic landscape as this?  Quite well, as it turns out.  

The incomes that I mentioned before that are going up will mean more spending.  That means companies will do well.  That, in turn, means the stock market will move higher.  We have seen this over the past several months as the Dow has hit many records towards the close of the past year.  And, a company such as a wealth-management firm will do very well with those kinds of opportunities.  

Here are the net profits and earnings per share over the past several years:

2011:   -93.3  -$0.90

2012:    51.1    $0.51

2013:  165.5    $1.72

2014:  180.8    $1.87

2015:  188.2    $1.89

These are solid net profits and solid earnings-per-share.  But, what I really like is that the year 2016 is looking to come in well above the 1.89 eps from 2015, and crest above the $2.10 per share.  And, yet, the stock is trading at $22.  That means that you can buy this company at 10-times earnings.  these kinds of bargains are hard to find on a regular basis.  So, when you do find them you need to take advantage of them.  

The reason this stock is down as much as it is is simply that the financial stocks were so heavily beaten down during the financial crisis.  Since then, large numbers of investors have not found the courage to buy into this kinds of companies.  This presents a great opportunity.  Our financial stocks were hit very hard several years ago.  And, now that the economy is turning, these same stocks have been lagging the overall market. The current EPS is sitting above 25.  The average over the past 50 years is 15.  this goes to show how undervalued the financial stocks are.  And yet, financial stocks may have the biggest opportunity at advancing in the coming years.  

While it may be some time before investors find favor again with financial stocks, it is important to look at your overall risk with this company.  Assuming that in an expansionary economic landscape that this company merely maintains its current earnings and revenue, then you are buying this stock at 10-times earnings.  That means you are picking up this earning potential with the opportunity to earn 10% on your money.  That is a fairly low risk.  considering the alternative, the yield on the 10-year government bond is still below 3%.  Your earnings from this far exceed the return on government debt.  

It will be a little bit of time before the financial sector catches up to the EPS ratio of the rest of the general market.  But, eventually, it will happen.  Then, once that happens, you are very likely to see a 50% increase in the value of this stock merely because of the stock catching up to the average of the market.  Plus, any future earnings increases will be reflected in the stock price.  

I do not see many downside risks to picking up these stocks.  These are the kinds of equities I seek out regularly, stocks that have fallen out of favor years ago.  This company would be an excellent addition to your portfolio.

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Editorial Staff

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