Piper Sandler (PIPR)

Investment banking firm Piper Sandler (NYSE:PIPR) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 33.3% year on year to $479.3 million. Its non-GAAP profit of $3.82 per share was 16.7% above analysts’ consensus estimates.

Company Overview

Tracing its roots back to 1895 and rebranded from Piper Jaffray in 2020, Piper Sandler (NYSE:PIPR) is an investment bank that provides advisory services, capital raising, institutional brokerage, and research for corporations, governments, and institutional investors.

Investment banks and brokerages facilitate capital raises, mergers and acquisitions, and securities trading. The sector benefits from corporate activity during economic expansion, increased retail trading participation, and advisory opportunities in emerging sectors. Headwinds include economic cycle vulnerability affecting deal flow, compressed trading commissions due to electronic platforms, and regulatory capital requirements constraining certain higher-risk activities.

Piper Sandler competes with other middle-market investment banks such as Jefferies Financial Group (NYSE:JEF), Raymond James Financial (NYSE:RJF), Houlihan Lokey (NYSE:HLI), and Lazard (NYSE:LAZ), as well as the middle-market divisions of larger financial institutions like Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS).

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Piper Sandler’s 9.1% annualized revenue growth over the last five years was decent. Its growth was slightly above the average financials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Piper Sandler’s annualized revenue growth of 16.4% over the last two years is above its five-year trend, suggesting its demand recently accelerated. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Piper Sandler reported wonderful year-on-year revenue growth of 33.3%, and its $479.3 million of revenue exceeded Wall Street’s estimates by 9.8%.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Investment Banking & Brokerage companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

Interest income and expenses play a big role in financial institutions' profitability, so they should be factored into the definition of profit. Taxes, however, should not as they are largely out of a company's control. This is pre-tax profit by definition.

Over the last four years, Piper Sandler’s pre-tax profit margin has risen by 3.6 percentage points, going from 19.2% to 15.6%. Luckily, it seems the company has recently taken steps to address its expense base as its pre-tax profit margin expanded by 9.3 percentage points on a two-year basis.

In Q3, Piper Sandler’s pre-tax profit margin was 22.4%. This result was 6.9 percentage points better than the same quarter last year.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Piper Sandler’s EPS grew at a decent 12.5% compounded annual growth rate over the last five years, higher than its 9.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Piper Sandler, its two-year annual EPS growth of 35.2% was higher than its five-year trend. This acceleration made it one of the faster-growing financials companies in recent history.

In Q3, Piper Sandler reported adjusted EPS of $3.82, up from $2.57 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Piper Sandler’s full-year EPS of $15.66 to grow 11.5%.

Financial firms profit by providing a wide range of services, making them fundamentally balance sheet-driven enterprises with multiple intermediation roles. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these multifaceted institutions.

When analyzing this sector, tangible book value per share (TBVPS) takes precedence over many other metrics. This measure isolates genuine per-share value and provides insight into the institution’s capital position across diverse operations. On the other hand, EPS is often distorted by the diverse nature of operations, mergers, and various accounting treatments across different business units. Book value provides clearer performance insights.

Piper Sandler’s TBVPS grew at a solid 11% annual clip over the last five years. TBVPS growth has recently decelerated a bit to 9.8% annual growth over the last two years (from $40.45 to $48.80 per share).

Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.

Over the last five years, Piper Sandler has averaged an ROE of 14.6%, healthy for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows Piper Sandler has a decent competitive moat.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

Piper Sandler has no debt, so leverage is not an issue here.

We were impressed by how significantly Piper Sandler blew past analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 1.3% to $331.08 immediately following the results.

Updated: December 4, 2025 at 11:13 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Piper Sandler.

Piper Sandler is a high-quality business worth owning. For starters, its revenue growth was decent over the last five years and is expected to accelerate over the next 12 months. On top of that, its expanding pre-tax profit margin shows the business has become more efficient, and its TBVPS growth was solid over the last five years.

Piper Sandler’s P/E ratio based on the next 12 months is 19.1x. Analyzing the financials landscape today, Piper Sandler’s positive attributes shine bright. We like the stock at this price.

Wall Street analysts have a consensus one-year price target of $391 on the company (compared to the current share price of $338.67), implying they see 15.5% upside in buying Piper Sandler in the short term.