Financials IPOs

The financials sector propels economic growth and facilitates trade. Financials IPOs can range from small regional banks to global investment managers and brokerages. Many financial companies make loans and have "balance sheet risk" (banks), while others do not (payment processors). Interest rate moves can have a unique impact on the financial sector, since borrowing costs and lending spreads are key to these businesses.

Unlike most sectors, interest is both a source of revenue and a core operating expense for traditional financial companies, which is why they are rarely evaluated on Enterprise Value, or as a multiple of sales or EBITDA. Instead, net income is paramount, and investors typically use valuation metrics like price-to-earnings (P/E) or price-to-book (P/B), and compare earnings-based operational metrics like return-on-equity (ROE) and return-on-assets (ROA). Certain sub-industries have their own commonly-used metrics; for example, banks are often evaluated on their efficiency ratio and non-performing loans, and insurers are evaluated on their loss ratio.