Sector Report4 min read
Financials: 22 A-Grades Hiding Five Banking Disasters
The sector splits clean: exchanges and payments print cash, megabanks burn it. Twenty companies improving can't hide the bottom five.
Jul 6, 2026
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Free cash flow analysis, sector reports, and market insights
The sector splits clean: exchanges and payments print cash, megabanks burn it. Twenty companies improving can't hide the bottom five.
When we last checked utilities a month ago, all twenty companies earned F-grades. Nothing has improved. Fourteen are now declining.
Half the sector is burning cash. The other half is printing it at margins that make the rest look broken.
Pharma and devices print cash at 20%+ margins. Health insurers struggle to crack 4%. Same sector, completely different businesses.
Two-thirds of industrials earn A-grades on cash generation. The other third includes Boeing burning $2.6 billion and legacy names stuck below 5%.
Tech sector prints 15.9% median FCF margin with the best grade distribution we track. But 12 of 38 companies are moving the wrong direction.
70% of REITs earn A-grades with 46% median FCF margins. Then there's Equinix burning cash at -9.7%.
Half the sector earns A-grades on FCF margins above 14%, but Walmart, Costco, and Estée Lauder tell a different story about retail cash generation.
Energy still prints A-grades, but 13 of 21 companies are trending down. The sector's 9% median FCF margin masks serious divergence.
Payment networks and exchanges print 50%+ margins while traditional banks bleed cash. The sector split is stark.
Every utility we grade gets an F. Median FCF margin is negative, debt averages 583x FCF, and 14 companies are declining.
Seven F-grades, half the sector declining, and a 7.6% median margin. This is what consumer weakness looks like in the numbers.