Stifel Financial: Good Q2 Performance Keeps Me Bullish

Core Viewpoint - Stifel Financial's shares are rated as a Buy due to a favorable outlook and undemanding valuations, with the market valuing the company at a low-teens P/E ratio despite strong Q2 results and positive guidance for the full year [1][9]. Financial Performance - Stifel Financial reported Q2 2024 financial results on July 24, with a top line growth of +15.9% YoY and +4.7% QoQ, reaching $1,217.9 million, surpassing Wall Street's consensus forecast by +2.5$1.60, beating market expectations by +4.0% [3]. - Fixed income transactional revenue grew by +20% QoQ and +58% YoY to $107 million, driven by increased trading gains [3]. - Investment banking advisory revenue reached$131 million, reflecting YoY and QoQ growth rates of +50% and +10%, respectively [4]. 2024 Guidance - Stifel Financial expects a top line increase of +8.7% to $4,725 million for FY 2024, indicating a turnaround from previous declines in net revenues [6]. - The company anticipates stable compensation expenses and a decrease in non-compensation operating expenses-to-revenue ratio from 23.2% in FY 2023 to 20.0% in FY 2024 [6]. Valuation Metrics - Stifel Financial currently trades at a normalized P/E of 12 times, with an expected EPS CAGR of +23% from FY 2023 to FY 2026, resulting in a PEG ratio of approximately 0.52, indicating attractive valuations [7].