4 Financial Stocks: Buyback Machines, Buffett's Rebound, and a BNPL Reset

Weekly wrap columns sort financial stocks into gainers and losers. That's the easy job. The harder one is figuring out whether the move reflects durable factor improvement or a one-way story that's already run ahead of itself.

This week's divergence across four names tells a clearer story than the headline movers list. Santander and Berkshire Hathaway climbed because capital returns and portfolio holdings are doing structural work. HSBC beat estimates but fell from its 52-week high because a prior quarter's charges are still weighting investor judgment. Sezzle reported record numbers and crashed 60% in two sessions because growth deceleration in the second half forced a full repricing. Same sector, different mechanisms.

1. Santander (SAN): The Buyback Machine Trading at the Cheapest Multiple

Santander is up 25.3% year-to-date, near its 52-week high of $14.93, after H1 2026 results showed attributable profit up 31% to €8.97 billion and EPS up 38% to 60 euro cents. Return on tangible equity sits at 17.4%. But the price action isn't driven by the earnings print alone. It's driven by what management is doing with the capital.

The bank has spent €3.26 billion of its authorized buyback program as of mid-June and announced a further €1.8 billion of purchases, bringing cumulative buybacks to roughly €9 billion against a €10 billion target across 2025 and 2026. That's buyback yield — the rate at which a company shrinks its share count, boosting per-share earnings even if the total pie doesn't grow — working alongside rising dividends.

Put that into a peer frame and the picture gets sharper. Santander trades at 11.5x trailing earnings, the cheapest in the comparison set: Bank of America is at 13.8x, JPMorgan at 14.9x, Goldman Sachs at 15.1x, and Citigroup at 12.8x. The PEG ratio (price-to-earnings divided by earnings growth rate) is 0.31, meaning you're paying a fraction of a multiple for each point of growth. Against major US banks, that's a material discount.

The TSB acquisition, completed in May, adds scale to the UK operation — making Santander the third-largest UK bank by current account balances and the fourth-largest mortgage lender. Integration charges are near-term noise. The structural move is a larger, higher-quality UK deposit base at a valuation that's still below the peer median.

Portfolio role: This belongs in the dividend-and-buyback sleeve. The risk is net interest margin compression as the ECB cuts rates and the FCA's probe into historical motor finance commissions could force retroactive payouts. But at 11.5x PE with a 1.39% dividend yield and aggressive share repurchases, the valuation gap to US peers is the cushion that makes the trade defensible.

2. Berkshire Hathaway (BRK.B): The Portfolio Catching Up

Berkshire's Class B shares hit an eight-month high of $524.61 on August 6, up 5.7% over 20 trading days, and are still only about 5.2% below the all-time close reached on May 2, 2025 — before Buffett announced his planned departure at the end of that year. The stock is now above its 200-day moving average and has a rolling annual return of 11.9%.

The rally is mechanical: Berkshire's top holdings are climbing. Apple, the largest position, is worth over $70 billion and up 13.6% year-to-date. Coca-Cola, at $35 billion, is up 25%. Bank of America, valued at nearly $32 billion, is up 12.6%. The market is no longer pricing Buffett transition risk the way it did in the spring. UBS analyst Brian Meredith raised his Class B target to $585 from $570, citing potential buybacks — Berkshire may have repurchased up to $11 billion in Q2 — and positive earnings trends.

The Q2 earnings report drops today, August 8. Consensus EPS is $5.04, versus $5.25 in Q1. Revenue consensus is $96.5 billion, against $93.7 billion in Q1. The Q1 actual beat EPS by roughly 3.6%. Whether Q2 sustains that beat is the next data point.

Valuation sits at 15.5x trailing earnings, 17.7x forward. That's above Santander but below Goldman Sachs at 15.1x trailing. ROE is 12.1%, below Santander's 15.1% but reasonable for a conglomerate that includes insurance operations and a massive cash pile (net debt of $128.6 billion against $750.2 billion in equity, or a 17.1% debt-to-equity ratio).

Portfolio role: A quality-hold sleeve name. Berkshire isn't a trade for momentum — its turnover rate is 0.26% per day, barely moving. It's a position that rewards patience: capital deployed at scale into undervalued businesses, with the buyback program acting as a floor on the share count. The trigger that would change this view is a Q2 miss combined with weak commentary on capital deployment, signaling that the Abel era hasn't replicated the capital allocation discipline.

3. HSBC (HSBA): The Beat That Didn't Move the Needle

HSBC announced its 2026 interim results on August 4, with Q2 earnings beating estimates, a fresh share buyback program, and an elevated cost-cutting target. CEO Georges Elhedery called the results proof that HSBC is becoming "the stronger bank we set out to build." The stock had hit its all-time high of $107.86 the day before on the anticipation.

By August 7, it was at $103.73, down roughly 4% from the high. The beat didn't stick.

The drag is the May miss. In Q1, HSBC reported pre-tax profit of $9.4 billion, below the $9.59 billion consensus. The shortfall came from larger-than-expected credit losses tied to a UK fraud-related exposure and impacts from the conflict in the Middle East. Investors don't usually forget a quarter of charges that quickly, especially when the bank operates across Hong Kong, the UK, Europe, and emerging markets. The interim beat told them operations are normalizing; it didn't tell them the tail risk has disappeared.

HSBC's market cap is $352 billion, the bank is up 36.3% year-to-date, and it carries $131 billion in annual revenue. The stock is sitting 38.8% above its 52-week low, which means there's room below as well as above.

Portfolio role: Watch list, not conviction hold. The cost-cutting target raise and new buyback are the right mechanical moves. But until the fraud-related exposure and Middle East implications are fully resolved and reflected in a quarter without surprise impairments, the upside is capped. The trigger that would change this view is two consecutive quarters of clean earnings without impairment surprises, followed by the buyback program showing visible share-count reduction.

4. Sezzle (SEZL): Record Revenue, Broken Price

Sezzle reported Q2 revenue of $149.7 million, up 51.7% year-over-year and beating estimates by 9.8%. Adjusted EPS of $1.13 was 11.3% above consensus. Gross merchandise volume hit a record $1.3 billion. Management raised full-year adjusted EPS guidance to $5.25, a 2.9% increase. Active subscribers grew 76.4% to 854,000.

The stock closed up 2.37% on August 5, then plunged roughly 28% after hours on August 6 and another 34% on August 7. It's now at $118.02, down from a pre-earnings close of $178.53. The two-day collapse wiped out the majority of the recent rally.

The beat didn't matter because the market had already priced the best-case scenario into a $5.86 billion market cap. What changed the story was the forward look: management guided credit provisions to 2.5%–3.0% of GMV, with some quarters potentially exceeding 3.0%. That's the rate at which Sezzle expects borrowers not to pay — and it's higher than investors modeled. Management also signaled a pullback in marketing spend in Q3, acknowledging that the aggressive customer acquisition of Q2 (where marketing spend more than doubled) isn't sustainable without degrading payback periods.

Net profit margin compressed from 28.0% in the prior year to 27.2% in Q2. That looks like a small number until you remember Sezzle's entire thesis depends on scaling while keeping credit costs and acquisition costs in check. The margin slip, combined with the elevated credit provision guidance and the planned marketing pullback, pointed to slower H2 revenue growth. The market priced that as a growth deceleration risk, not as a temporary speed bump.

The two-year annualized revenue growth rate of 66.1% is real. The 5-year CAGR of 42.2% is real. But the stock fell because those backward-looking numbers were already reflected in the share price, and the forward-looking signals — higher credit costs, lower marketing spend, margin compression — pointed to the growth curve flattening.

Portfolio role: Stay away for now. A 60% drop in two days doesn't make the stock cheap if the growth thesis that priced it at $178 is no longer intact. The trigger that would change this view is Q3 results showing credit provisions holding at the low end of the 2.5%–3.0% guidance range, revenue growth staying above 40%, and the marketing pullback not meaningfully denting gross merchandise volume.

What the Divergence Says

These four names show the market sorting financial businesses by different criteria. Santander is being rewarded for buying back shares at a discount to US bank peers. Berkshire is recovering because its portfolio companies are climbing and the Buffett transition scare has faded. HSBC can't shake the overhang from unexpected charges despite a clean Q2 beat. Sezzle's record numbers collapsed because the market priced H2 deceleration faster than the report could defend it.

The portfolio logic is straightforward: capital return businesses at a valuation discount (Santander) and proven compounders with scale (Berkshire) are in the right direction. A giant bank with unresolved charge risk (HSBC) is a watch-list name until the earnings are clean. A growth-finance story with a broken forward curve (Sezzle) needs one more quarter before anyone knows if the crash was overreaction or repricing.

Narratives move quickly. The factor stack moves more slowly and usually tells you more.