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Why Stifel Financial Should be Added to Your Portfolio Now?

With cost-reduction initiatives and the company’s balance-sheet growth, Stifel Financial Corp. SF appears to be a promising buying opportunity now. Further, the recent interest rate hikes are anticipated to further stabilize the top line.

Though brokerage business is currently challenging, investments in investment banking franchise are likely to have further positive impact on the financials.

Therefore, it’s a good idea to add stocks with robust fundamentals and long-term growth opportunities to your portfolio, at the current level.

Additionally, Stifel Financial’s shares gained 33.7% over the past year compared with 33.2% growth recorded by the industry it belongs to.



Why is Stifel Financial a Must Buy

Benefit from Rate Hike: With a rise in rates, brokerage firms are likely to engage in more investment activities. As brokerage firms earn interest income on un-invested cash in customer accounts, this rate rise will allow the brokerage firms to invest at higher rates. As Stifel Financial currently derives some portion of its revenues from net interest income, the company is set to benefit from recent rate hikes.

Strong Organic Growth: The company’s net revenue witnessed a 12.4% compounded annual growth rate (CAGR) over the last five years, ending 2016, and also depicted an uptrend in the first six months of 2017. The company’s projected sales growth (F1/F0) of 10.2%, as against the nil industry average, indicates consistent upward momentum in revenues.

Earnings Growth: Stifel Financial witnessed earnings growth of 12% in the last three–five years. In addition, the company’s long-term (three–five years) estimated EPS growth rate of 2.4% promises rewards for investors over the long run.

Superior Return on Equity (ROE): Stifel Financial’s ROE of 9.3%, as compared with the industry average 9.2%, highlights the company’s commendable position over its peers.

Favorable Zacks Rank: Stifel Financial currently carries a Zacks Rank #2 (Buy). The bullish rank is driven by upward earnings estimate revisions for the last 30 days. For 2017, the Zacks Consensus Estimate advanced 4.7% to $3.36, while for 2018, it climbed 2.8% to $3.65.

Stock is Undervalued: Stifel Financial has P/E and P/B ratios of 14.76x and 1.26x, compared to the industry average of 17.97x and 1.69x, respectively. Based on these ratios, the stock seems undervalued.

Stocks to Consider

E*TRADE Financial Corporation ETFC has been recording upward estimate revisions for the last 60 days. In addition, the company’s shares have risen nearly 57.3% over the past year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Raymond James Financial, Inc. RJF has been witnessing upward estimate revisions for the last 60 days. Further, the stock has surged nearly 14% so far, this year. It currently carries a Zacks Rank #2.

LPL Financial Holdings Inc. LPLA has been witnessing upward estimate revisions for the last 60 days. Over the past year, the company’s share price has been up more than 65%. It also flaunts a Zacks Rank #1.

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E*TRADE Financial Corporation (ETFC): Free Stock Analysis Report
 
Stifel Financial Corporation (SF): Free Stock Analysis Report
 
Raymond James Financial, Inc. (RJF): Free Stock Analysis Report
 
LPL Financial Holdings Inc. (LPLA): Free Stock Analysis Report
 
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