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Stifel Financial (SF) Q1 Earnings in Line, Revenues Up Y/Y
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Stifel Financial Corp. (SF - Free Report) reported first-quarter 2017 net income of 74 cents per share available to common shareholders, in line with the Zacks Consensus Estimate. However, the figure came higher than the prior-year tally of 36 cents.
Results reflected improved top line and a strong capital position. However, higher operating expenses were a major drag.
On a GAAP basis, Stifel Financial reported net income available to common shareholders of $63.2 million or 78 cents per share compared with net income of $27.1 million or 36 cents in the year-ago quarter. The results included certain non-recurring items.
Revenue Rises, Expenses Flare Up
Net revenue came in at $675.5 million, up 9.0% year over year. The results were mainly driven by higher investment banking, along with asset management and service fees revenues. However, the revenue figure lagged the Zacks Consensus Estimate of $686.7 million.
Global Wealth Management segment’s net revenue increased 16.6% year over year, while Institutional Group’s net revenue edged down 1.6%. Other revenues were a negative $4.7 million compared with a negative $1.1 million in the prior-year quarter.
Stifel Financial’s non-interest expenses were $596.5 million, up 3.6% from the year-ago quarter. The mounting non-interest operating expenses are a result of a rise in compensation and benefits expenses, and elevated provision for loan losses and other operating expenses.
Improvement in Credit Quality
Credit quality improved in the quarter. Allowance, as a percentage of loans, decreased to 0.87% from 0.98% in the prior-year quarter. Moreover, non-performing assets as a percentage of total assets decreased to 0.21% from 0.28% in the year-earlier quarter.
Strong Capital Position
Stifel Financial’s capital position was strong during the quarter. As of Mar 31, 2017, total assets improved 34.6% to $19.1 billion from $14.2 billion as of Mar 31, 2016. Book value came in at $38.40 per share, up 5.6% from the prior-year quarter. Stockholders’ equity increased 14.9% year over year to $2.8 billion.
As of Mar 31, 2017, the company’s Tier 1 leverage capital ratio was 10.1% compared with 11.6% as of Mar 31, 2016. Further, Tier 1 risk-based capital ratio was 20.9% compared with 21.3% as of Mar 31, 2016.
Our Viewpoint
Stifel Financial, with its solid business model and strategic acquisitions, is well poised for growth. While the company’s sound capital position and robust top-line performance will boost results over the long haul, sluggish economic recovery, regulatory issues and escalating expenses raise concerns.
Stifel Financial Corporation Price, Consensus and EPS Surprise
Interactive Brokers Group, Inc. (IBKR - Free Report) reported first-quarter 2017 adjusted earnings of 34 cents per share, which lagged the Zacks Consensus Estimate of 39 cents. Decrease in revenues, higher expenses as well as disappointing segment performance led to the lower-than-expected results. However, on the upside, the company recorded improvement in interest income and a rise in DARTs.
The Charles Schwab Corp.’s (SCHW - Free Report) first-quarter 2017 earnings of 39 cents per share outpaced the Zacks Consensus Estimate of 37 cents. Revenue growth, lower level of fee waivers and no provisions were among the positives. However, higher expenses and a decline in trading revenues remained the headwinds.
E*TRADE Financial Corporation reported first-quarter 2017 earnings of 48 cents per share, which easily surpassed the Zacks Consensus Estimate of 39 cents. Better-than-expected results reflected increased net revenue and a benefit to provision for loan losses. However, higher operating expenses were on the downside.
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Stifel Financial (SF) Q1 Earnings in Line, Revenues Up Y/Y
Stifel Financial Corp. (SF - Free Report) reported first-quarter 2017 net income of 74 cents per share available to common shareholders, in line with the Zacks Consensus Estimate. However, the figure came higher than the prior-year tally of 36 cents.
Results reflected improved top line and a strong capital position. However, higher operating expenses were a major drag.
On a GAAP basis, Stifel Financial reported net income available to common shareholders of $63.2 million or 78 cents per share compared with net income of $27.1 million or 36 cents in the year-ago quarter. The results included certain non-recurring items.
Revenue Rises, Expenses Flare Up
Net revenue came in at $675.5 million, up 9.0% year over year. The results were mainly driven by higher investment banking, along with asset management and service fees revenues. However, the revenue figure lagged the Zacks Consensus Estimate of $686.7 million.
Global Wealth Management segment’s net revenue increased 16.6% year over year, while Institutional Group’s net revenue edged down 1.6%. Other revenues were a negative $4.7 million compared with a negative $1.1 million in the prior-year quarter.
Stifel Financial’s non-interest expenses were $596.5 million, up 3.6% from the year-ago quarter. The mounting non-interest operating expenses are a result of a rise in compensation and benefits expenses, and elevated provision for loan losses and other operating expenses.
Improvement in Credit Quality
Credit quality improved in the quarter. Allowance, as a percentage of loans, decreased to 0.87% from 0.98% in the prior-year quarter. Moreover, non-performing assets as a percentage of total assets decreased to 0.21% from 0.28% in the year-earlier quarter.
Strong Capital Position
Stifel Financial’s capital position was strong during the quarter. As of Mar 31, 2017, total assets improved 34.6% to $19.1 billion from $14.2 billion as of Mar 31, 2016. Book value came in at $38.40 per share, up 5.6% from the prior-year quarter. Stockholders’ equity increased 14.9% year over year to $2.8 billion.
As of Mar 31, 2017, the company’s Tier 1 leverage capital ratio was 10.1% compared with 11.6% as of Mar 31, 2016. Further, Tier 1 risk-based capital ratio was 20.9% compared with 21.3% as of Mar 31, 2016.
Our Viewpoint
Stifel Financial, with its solid business model and strategic acquisitions, is well poised for growth. While the company’s sound capital position and robust top-line performance will boost results over the long haul, sluggish economic recovery, regulatory issues and escalating expenses raise concerns.
Stifel Financial Corporation Price, Consensus and EPS Surprise
Stifel Financial Corporation Price, Consensus and EPS Surprise | Stifel Financial Corporation Quote
Currently, Stifel Financial carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Investment Brokerage Firms
Interactive Brokers Group, Inc. (IBKR - Free Report) reported first-quarter 2017 adjusted earnings of 34 cents per share, which lagged the Zacks Consensus Estimate of 39 cents. Decrease in revenues, higher expenses as well as disappointing segment performance led to the lower-than-expected results. However, on the upside, the company recorded improvement in interest income and a rise in DARTs.
The Charles Schwab Corp.’s (SCHW - Free Report) first-quarter 2017 earnings of 39 cents per share outpaced the Zacks Consensus Estimate of 37 cents. Revenue growth, lower level of fee waivers and no provisions were among the positives. However, higher expenses and a decline in trading revenues remained the headwinds.
E*TRADE Financial Corporation reported first-quarter 2017 earnings of 48 cents per share, which easily surpassed the Zacks Consensus Estimate of 39 cents. Better-than-expected results reflected increased net revenue and a benefit to provision for loan losses. However, higher operating expenses were on the downside.
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>