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Stifel Financial (SF) Q1 Earnings Beat on High Revenues

Stifel Financial Corp.SF reported first-quarter 2016 net income of 57 cents per share from continuing operations, beating the Zacks Consensus Estimate of 52 cents. However, the figure was below the prior-year figure of 65 cents.

Results benefited from an 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 from continuing operations of $27.1 million or 36 cents per share, compared with net income of $43.1 million or 56 cents in the prior-year quarter. The results included certain non-recurring items.

Performance in Detail

Net revenues were recorded at $620 million, up 10.5% year over year. The results were driven by higher global wealth management and institutional group revenues. Moreover, the revenue figure outpaced the Zacks Consensus Estimate of $618 million.

Global Wealth Management and Institutional Group segments' net revenues increased 15.3% and 1.1%, respectively, on a year-over-year basis. Other revenues were a negative $1.1 million compared with a negative $7.0 million in the prior-year quarter.

Stifel Financial's non-interest expenses were $576.1 million, up 17.3% from the year-ago quarter. The mounting non-interest operating expenses are a result of a rise in most categories of expenses including higher compensation and benefits expenses and elevated non-compensation operating expenses.

Credit Quality

Credit quality was a mixed bag in the quarter. Allowance, as a percentage of loans, decreased to 0.94% from 0.96% in the prior-year quarter. Moreover, non-performing assets as a percentage of total assets increased to 0.28% from 0.13% in the year-earlier quarter.

Capital Position

Stifel Financial's capital position was strong during the quarter. As of Mar 31, 2016, total assets improved 51.6% to $14.2 billion from $9.4 billion as of Mar 31, 2015. Book value came in at $36.37 per share, up 4.4% from the prior-year quarter. Stockholders' equity increased 2.3% year over year to $2.4 billion.

As of Mar 31, 2016, the company's Tier 1 leverage capital ratio was 11.6% compared with 17.5% as of Mar 31, 2015. Further, Tier 1 risk-based capital ratio was 21.3% compared with 29.9% as of Mar 31, 2015.

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 low interest rate environment raise concern.

Stifel Financial currently carries a Zacks Rank #4 (Sell). Some better-ranked finance stocks include LPL Financial Holdings Inc. LPLA , Raymond James Financial, Inc. RJF and Enterprise Financial Services Corp. EFSC . All of these stocks sport a Zacks Rank #1 (Strong Buy).

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ENTERPRISE FINL (EFSC): Free Stock Analysis Report

STIFEL FINL (SF): Free Stock Analysis Report

RAYMOND JAS FIN (RJF): Free Stock Analysis Report

LPL FINL HLDGS (LPLA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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