Seeking Alpha’s top quant-rated financial stocks ahead of Q2 print

The S&P500’s financial sector rose over 5% in the second quarter amid investors’ concerns over Doanld Trump’s uncertain tariff policies and brewing conflict in the Middle East. As companies prepare to report their Q2 results, investors will be closely watching for the impact of these macroeconomic headwinds especially Trump’s trade war that began on April 2.

On a year-to-date basis, XLF has outpaced the broader markets, emerging as one among the top three leading sectors of 2025, alongside technology and industrials.

For the second quarter, the financials sector is expected to post the fifth-highest year-over-year earnings growth among the eleven sectors, at 2.4%, according to a recent report by Factset.

At the industry level, four of the five industries in the sector are expected to report year-over-year earnings growth led by the consumer finance industry which is projected to post an earnings growth rate of 23%. The banks industry is the only group within the sector that is seen reporting a year-over-year earnings decline of -11%.

Seeking Alpha’s quant rating system gives the financial sector an average health score of 3.20. The ratings are based on quantitative metrics such as valuation, earnings growth, and recent stock performance, with a maximum possible score of 5 for any individual company.

Overall, six stocks within the sector have a Buy and above rating, four carried a Sell suggestion and 62 had a neutral rating.

Synchrony Financial (NYSE:SYF) led the sectoral quant rating with a score of 4.82. The company had reported that its credit card delinquency rate had gone down for the second straight month in April while net charge-offs ticked up for the month.

Recently, SYF was also featured as one of Deutsche Bank’s top picks in the sector.

“With SYF still trading at only ~7.5x forward EPS and over 2.5 turns below peer COF on 2027E EPS, which fully integrates the accretion from the DFS acquisition, and with nearly all key earnings drivers inflecting positively, we see this as a compelling opportunity,” Deutsche said.

Banking heavyweights like Morgan Stanley (NYSE:MS), JPMorgan (NYSE:JPM) and Goldman Sachs (NYSE:GS) had a score of 3.28, 3.26 and 3.26 respectively. All three banks posted strong Q1 earnings with their key metrics- EPS and revenue- surpassing analysts’ consensus.

In late June, the Federal Reserve said that all the 22 participating banks has passed the annual stress test, boosting their stock prices and stoking investors’ optimism that the banks will boost dividends and stock buybacks. Following the test results, MS, JPM and GS said they would boost their dividends by 8.1%, 7.1% and 33% respectively.

Despite their performance, all three stocks have a Hold rating as per Seeking Alpha’s quant ratings.

Erie Indemnity Company (NASDAQ:ERIE) was the worst performer in the sector with a score of 1.26. The stock also ranked as the biggest sectoral loser in Q2 with its stock value declining by nearly 16% during the period.

The company posted a mixed Q1 results where its beat revenue estimates but missed earnings forecast.