NEW YORK ( TheStreet) -- Financial services stocks were hit hard in the first quarter, but some companies were able to significantly outperform.

The S&P 500 Financials Index dropped 2.51% for the first three months of the year, underperforming the broader S&P 500 Index, which inched just 0.44% higher for the same time period.

TheStreet paired the 10 best performing financial sector stocks with TheStreet Ratings to determine whether they really are good investments going forward.

TheStreet Ratings, TheStreet's proprietary ratings tool, projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

Check out which stocks were among the best financial services performers in the S&P 500 for the quarter. And when you're done with that be sure to find out which financial stock had the worst performance in the S&P 500 for the first quarter.

 

XL Chart XL data by YCharts

10. XL Group Plc (XL)
Market Cap: $9.4billion
Year-to-date return: 7.07%
TheStreet Ratings: Buy, B

XL GROUP Public Limited Company, an insurance and reinsurance company, provides property, casualty, and specialty products to industrial, commercial, and professional firms; and insurance companies and other enterprises worldwide. The company operates in two segments: Insurance and Reinsurance.

"We rate XL GROUP PLC (XL) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • XL's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • Net operating cash flow has significantly increased by 422.52% to $235.16 million when compared to the same quarter last year. In addition, XL GROUP PLC has also vastly surpassed the industry average cash flow growth rate of 5.97%.
  • XL GROUP PLC's earnings per share declined by 49.5% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, XL GROUP PLC reported lower earnings of $0.68 versus $3.62 in the prior year. This year, the market expects an improvement in earnings ($3.20 versus $0.68).
  • XL, with its decline in revenue, underperformed when compared the industry average of 5.5%. Since the same quarter one year prior, revenues fell by 23.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

 

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9. Simon Property Group Inc. (SPG - Get Report)
Market Cap: $62 billion
Year-to-date return: 7.43%
TheStreet Ratings: Buy, A-

Simon Property Group, Inc. is an equity real estate investment trust. The firm invests in the real estate markets across the globe. It engages in investment, ownership, management, and development of properties.

"We rate SIMON PROPERTY GROUP INC (SPG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, solid stock price performance, impressive record of earnings per share growth and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.1%. Since the same quarter one year prior, revenues slightly increased by 4.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, SIMON PROPERTY GROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 28.30% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SPG should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • SIMON PROPERTY GROUP INC has improved earnings per share by 19.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, SIMON PROPERTY GROUP INC increased its bottom line by earning $4.44 versus $3.72 in the prior year. This year, the market expects an improvement in earnings ($4.93 versus $4.44).
  • The gross profit margin for SIMON PROPERTY GROUP INC is rather high; currently it is at 52.65%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 29.94% trails the industry average.

 

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8. SL Green Realty Corp. (SLG - Get Report)
Market Cap: $12.8 billion
Year-to-date return: 7.86%
TheStreet Ratings: Buy, B

SL Green Realty Corp. is a real estate investment trust (REIT). The firm engages in the property management, acquisitions, financing, development, construction, and leasing. It also provides tenant services to its clients. The firm invests in real estate markets of the United States.

"We rate SL GREEN REALTY CORP (SLG) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, reasonable valuation levels, good cash flow from operations and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SLG's revenue growth has slightly outpaced the industry average of 10.1%. Since the same quarter one year prior, revenues rose by 10.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 30.89% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 48.1% when compared to the same quarter one year prior, rising from $40.86 million to $60.52 million.
  • Net operating cash flow has increased to $113.18 million or 49.40% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 13.05%.

 

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7. Moody's Corp. (MCO - Get Report)
Market Cap: $ billion
Year-to-date return: 8.34%
TheStreet Ratings: Buy, B

Moody's Corporation provides credit ratings; and credit, capital markets, and economic related research, data, and analytical tools worldwide. The company operates through Moody's Investors Service and Moody's Analytics segments.

"We rate MOODY'S CORP (MCO) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, increase in net income, good cash flow from operations and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 2.4%. Since the same quarter one year prior, revenues rose by 12.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 29.75% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MCO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Diversified Financial Services industry average. The net income increased by 14.3% when compared to the same quarter one year prior, going from $206.70 million to $236.30 million.
  • Net operating cash flow has increased to $308.80 million or 12.98% when compared to the same quarter last year. In addition, MOODY'S CORP has also modestly surpassed the industry average cash flow growth rate of 12.72%.
  • The gross profit margin for MOODY'S CORP is currently very high, coming in at 70.88%. Regardless of MCO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MCO's net profit margin of 26.92% significantly outperformed against the industry.

EQR Chart EQR data by YCharts

6. Equity Residential (EQR - Get Report)
Market Cap: $28.5 billion
Year-to-date return: 8.38%
TheStreet Ratings: Buy, B

Equity Residential, a real estate investment trust (REIT), engages in the acquisition, development, and management of multifamily properties in the United States.

"We rate EQUITY RESIDENTIAL (EQR) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, revenue growth, good cash flow from operations and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 227.77% and other important driving factors, this stock has surged by 37.40% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, EQR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 96.2% when compared to the same quarter one year prior, rising from $110.98 million to $217.74 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.1%. Since the same quarter one year prior, revenues slightly increased by 4.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 204.25% to $309.80 million when compared to the same quarter last year. In addition, EQUITY RESIDENTIAL has also vastly surpassed the industry average cash flow growth rate of 13.05%.
  • 38.02% is the gross profit margin for EQUITY RESIDENTIAL which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 32.58% trails the industry average.

 

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5. Boston Properties (BXP - Get Report)
Market Cap: $21.6 billion
Year-to-date return: 9.16%
TheStreet Ratings: Buy, B

Boston Properties, Inc., a real estate investment trust (REIT), together with its subsidiaries, engages in the ownership and development of office properties.

"We rate BOSTON PROPERTIES INC (BXP) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, revenue growth and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 93.9% when compared to the same quarter one year prior, rising from $91.37 million to $177.16 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.1%. Since the same quarter one year prior, revenues slightly increased by 6.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • BOSTON PROPERTIES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, BOSTON PROPERTIES INC reported lower earnings of $2.82 versus $4.02 in the prior year. For the next year, the market is expecting a contraction of 29.6% in earnings ($1.99 versus $2.82).

 

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4. Essex Property Trust Inc. (ESS - Get Report)
Market Cap: $15 billion
Year-to-date return: 11.28%
TheStreet Ratings: Buy, B

Essex Property Trust, Inc. operates as a self-administered and self-managed real estate investment trust in the United States. It engages in the ownership, operation, management, acquisition, development, and redevelopment of apartment communities, as well as commercial properties.

"We rate ESSEX PROPERTY TRUST (ESS) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, solid stock price performance, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • ESS's very impressive revenue growth greatly exceeded the industry average of 10.1%. Since the same quarter one year prior, revenues leaped by 84.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 90.23% to $152.00 million when compared to the same quarter last year. In addition, ESSEX PROPERTY TRUST has also vastly surpassed the industry average cash flow growth rate of 13.05%.
  • Powered by its strong earnings growth of 57.50% and other important driving factors, this stock has surged by 41.14% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • ESSEX PROPERTY TRUST reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ESSEX PROPERTY TRUST reported lower earnings of $2.07 versus $3.25 in the prior year. This year, the market expects an improvement in earnings ($2.17 versus $2.07).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Real Estate Investment Trusts (REITs) industry average, but is greater than that of the S&P 500. The net income increased by 24.8% when compared to the same quarter one year prior, going from $33.24 million to $41.49 million.

 

CBG Chart CBG data by YCharts

3. CBRE Group Inc. - A (CBG)
Market Cap: $12.7 billion
Year-to-date return: 13.02%
TheStreet Ratings: Buy, A

CBRE Group, Inc. operates as a commercial real estate services and investment company worldwide. The company operates through Americas; Europe, Middle East and Africa; Asia Pacific; Global Investment Management; and Development Services segments.

"We rate CBRE GROUP INC (CBG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 1.4%. Since the same quarter one year prior, revenues rose by 24.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CBRE GROUP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CBRE GROUP INC increased its bottom line by earning $1.45 versus $0.94 in the prior year. This year, the market expects an improvement in earnings ($1.93 versus $1.45).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Management & Development industry. The net income increased by 78.2% when compared to the same quarter one year prior, rising from $114.65 million to $204.28 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Management & Development industry and the overall market, CBRE GROUP INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $593.30 million or 16.22% when compared to the same quarter last year. In addition, CBRE GROUP INC has also vastly surpassed the industry average cash flow growth rate of -51.22%.

 

MHFI Chart MHFI data by YCharts

2. McGraw Hill Financial Inc. (MHFI)
Market Cap: $28.6 billion
Year-to-date return: 16.21%
TheStreet Ratings: Hold, C+

McGraw Hill Financial, Inc. provides benchmarks and ratings, analytics, data, and research services for the capital, commodities, and commercial markets worldwide.

"We rate MCGRAW HILL FINANCIAL (MHFI) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MHFI's revenue growth has slightly outpaced the industry average of 2.4%. Since the same quarter one year prior, revenues slightly increased by 7.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, MHFI's share price has jumped by 38.05%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • The gross profit margin for MCGRAW HILL FINANCIAL is rather high; currently it is at 67.29%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -65.58% is in-line with the industry average.
  • Currently the debt-to-equity ratio of 1.64 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, MHFI maintains a poor quick ratio of 0.87, which illustrates the inability to avoid short-term cash problems.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Diversified Financial Services industry and the overall market, MCGRAW HILL FINANCIAL's return on equity significantly trails that of both the industry average and the S&P 500.

 

 

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1. E*Trade Financial Corp. (ETFC - Get Report)
Market Cap: $8.2 billion
Year-to-date return: 17.73%
TheStreet Ratings: Buy, B

E*TRADE Financial Corporation, a financial services company, provides brokerage and related products and services primarily to individual retail investors under the E*TRADE Financial brand name. It operates through two segments, Trading and Investing, and Balance Sheet Management.

"We rate E TRADE FINANCIAL CORP (ETFC) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • ETFC's revenue growth has slightly outpaced the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 0.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $333.00 million or 45.68% when compared to the same quarter last year. In addition, E TRADE FINANCIAL CORP has also vastly surpassed the industry average cash flow growth rate of -29.90%.
  • 44.88% is the gross profit margin for E TRADE FINANCIAL CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, ETFC's net profit margin of 8.07% significantly trails the industry average.
  • E TRADE FINANCIAL CORP's earnings per share declined by 30.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, E TRADE FINANCIAL CORP increased its bottom line by earning $1.00 versus $0.29 in the prior year. This year, the market expects an improvement in earnings ($1.14 versus $1.00).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Capital Markets industry and the overall market, E TRADE FINANCIAL CORP's return on equity is below that of both the industry average and the S&P 500.