Stock Analysis

With EPS Growth And More, Stifel Financial (NYSE:SF) Makes An Interesting Case

NYSE:SF
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Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Stifel Financial (NYSE:SF). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Stifel Financial with the means to add long-term value to shareholders.

Check out our latest analysis for Stifel Financial

Stifel Financial's Earnings Per Share Are Growing

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That means EPS growth is considered a real positive by most successful long-term investors. Shareholders will be happy to know that Stifel Financial's EPS has grown 23% each year, compound, over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Our analysis has highlighted that Stifel Financial's revenue from operations did not account for all of their revenue in the previous 12 months, so our analysis of its margins might not accurately reflect the underlying business. While we note Stifel Financial achieved similar EBIT margins to last year, revenue grew by a solid 9.3% to US$4.6b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

earnings-and-revenue-history
NYSE:SF Earnings and Revenue History July 29th 2022

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Stifel Financial's forecast profits?

Are Stifel Financial Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

First and foremost; there we saw no insiders sell Stifel Financial shares in the last year. Even better, though, is that the Chairman & CEO, Ronald Kruszewski, bought a whopping US$619k worth of shares, paying about US$61.94 per share, on average. Purchases like this can offer an insight into the faith of the company's management - and it seems to be all positive.

On top of the insider buying, it's good to see that Stifel Financial insiders have a valuable investment in the business. Notably, they have an enviable stake in the company, worth US$208m. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.

Should You Add Stifel Financial To Your Watchlist?

For growth investors, Stifel Financial's raw rate of earnings growth is a beacon in the night. On top of that, insiders own a significant piece of the pie when it comes to the company's stock, and one has been buying more. These things considered, this is one stock worth watching. You still need to take note of risks, for example - Stifel Financial has 1 warning sign we think you should be aware of.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Stifel Financial, you'll probably love this free list of growing companies that insiders are buying.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.