MW Financial stocks are off to their worst yearly start in a decade. How to spot value.

By Philip van Doorn

A screen of the S&P 500 financial sector highlights companies with high returns on equity that are trading at low P/E valuations

BNY Mellon passed a screen for low price/earnings valuations and high returns on equity within the S&P 500 financial-services sector.

The financial sector of the S&P 500 is off to its worst start at this time of the year since 2026. That means it is time to screen the sector to help investors begin their own research into stocks that might be primed for a rebound.

The S&P 500 financial services sector is the index's worst-performing sector so far in 2026.

Business-development companies are among the hardest-hit groups in the financial-services industry this year. These are nonbank lenders to small- and middle-market companies. No BDCs are included in the S&P 500 SPX, although some asset managers that manage BDCs are in the index. Here is a deep look into BDCs and how they are valued.

The S&P 500 financial sector traded at a weighted forward price/earnings ratio of 15.3 as of Monday's close, compared with a forward P/E of 21.6 for the full S&P 500. These are prices divided by consensus earnings-per-share estimates among analysts polled by LSEG, weighted by market capitalization. The financial sector was trading 71% of the full index's forward P/E valuation - a typical number.

To screen the S&P 500 financial sector for value, we looked at three factors. First, we narrowed the sector of 76 companies to 52 stocks trading at forward P/E valuations at or below the valuation of 15.3 for the sector.

Then we looked at returns on equity $(ROE)$ for the trailing 12 reported months.

Back in January, we took a narrower approach when looking at returns on tangible common equity (ROTCE) for large banks - a measure of particular importance to that industry group and its regulators. A screen highlighted bank stocks that appeared to be bargains based on improved ROTCE and declining forward P/E.

Since this new screen is for the entire financial sector, our second factor was to limit the group of 51 companies to those with trailing ROE ranking in the upper half.

Then we narrowed further to the 11 remaining financial services companies with majority "buy" or equivalent ratings among analysts polled by LSEG.

Here are the 11 stocks that passed the screen, sorted by ascending P/E:

   Company                           Forward P/E     ROE  Feb. 23 price  Consensus price target  Implied 12-month upside potential 
   Synchrony Financial                       7.3  21.30%         $68.88                  $91.19                                32% 
   Allstate Corp.                            8.1  39.52%        $206.16                 $243.11                                18% 
   Arch Capital Group Ltd.                  10.4  19.54%         $98.70                 $109.06                                10% 
   Assurant Inc.                            10.4  15.90%        $218.42                 $261.00                                19% 
   Apollo Global Management Inc.            11.9  14.70%        $113.73                 $160.00                                41% 
   Corpay Inc.                              12.5  30.31%        $332.57                 $380.32                                14% 
   Fifth Third Bancorp                      12.6  12.19%         $50.71                  $57.24                                13% 
   JPMorgan Chase & Co.                     13.5  16.13%        $297.67                 $339.79                                14% 
   Bank of New York Mellon Corp.            13.5  12.92%        $115.54                 $133.79                                16% 
   KKR & Co Inc.                            13.7  13.85%         $92.19                 $140.90                                53% 
   Willis Towers Watson PLC                 14.5  20.08%        $291.52                 $369.78                                27% 
                                                                                                                      Source: LSEG 

Click the tickers for more about each company.

Read: Tomi Kilgore's detailed guide to the information available on the MarketWatch quote page

Another screen: 10 stocks Wall Street expects to roar back after dropping at least 20% in 2026

-Philip van Doorn

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February 24, 2026 12:55 ET (17:55 GMT)

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