Piper Jaffray Companies
) hit its 52 week high on Oct. 17; the same day this investment
brokerage company reported solid third-quarter results, including a
125% positive earnings surprise. With a year-to-date return of
about 43.4% and a long-term expected earnings growth rate of 16.0%,
this Zacks #1 Rank (Strong Buy) looks like a solid growth pick.
Impressive Q3 Results On Oct.17, Piper Jaffray's third quarter
earnings from continuing operations of 72 cents per share
significantly outpaced the Zacks Consensus Estimate by 125.0%. This
marked PJC's third straight quarter with a positive earnings
surprise. The result also surged by 227.3% from last year. The
better-than-expected results were largely driven by considerable
top-line growth, partially offset by higher operating expenses.
Net revenue jumped 38.7% year over year to $133.0 million,
primarily driven by significant growth in institutional brokerage
revenue. Moreover, total non-interest expenses surged 21.5% to
$110.2 million, mainly due to a 30.1% rise in compensation and
As of September 30, 2012, assets under management were $13.8
billion, increasing 23.2% from $11.2 billion as of September 30,
2011. It also advanced 8.7% from $12.7 billion as of June 30, 2012.
Furthermore, tangible book value per share stood at $31.30,
compared with $29.10 in the prior-year quarter and $29.84 in the
Earnings Estimates Advancing
Over the past 60 days, the Zacks Consensus Estimate for 2012
improved 31.4% to $1.84 per share with 2 of 3 estimates moving
higher. For 2013, the Zacks Consensus Estimate increased 7.9% to
$2.33 over the same time frame, as all four estimates advanced.
The Zacks Consensus Estimate for 2012 reflects year-over-year
growth of about 113.6%, while the expected growth rate for 2013 is
Shares of Piper Jaffray currently trade at 15.8x 12-month forward
earnings, a 17% discount to the peer group average of 19.0x. Its
price to book ratio of 0.67 is at a 9.5% discount to the industry
median of 0.74.
Additionally, Piper Jaffray has a trailing 12-month ROE of 3.5%,
compared with the peer group average of 2.7%. This implies that the
company reinvests its earnings more efficiently compared with its
Moreover, given the long-term earnings growth projection of 16.0%,
the PEG ratio comes in at 0.98, a 2.0% discount to the benchmark of
1 for a fairly priced stock. Thus, the expected long-term earnings
growth is currently priced at a discount.
The stock has been continuously outperforming its 200 and 50 days
moving averages over the last three months, exhibiting steadfast
growth. Moreover, the year-to-date return for the stock is 43.4%,
compared with the S&P 500's return of 12.8%.
Headquartered in Minneapolis, Minnesota, Piper Jaffray provides
investment banking, institutional brokerage, asset management and
related financial services to mainly institutional clients. Founded
in 1895, the company has its operations in the U.S., Asia and
Europe. Moreover, the company has a market cap of about $507.6
million. Virtus Investment Partners Inc. (
) is the other Zacks #1 Rank (Strong Buy) stock in the same sector.
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