Stifel (SF)

Financial services firm Stifel Financial (NYSE:SF) announced better-than-expected revenue in Q4 CY2025, with sales up 14.4% year on year to $1.56 billion. Its non-GAAP profit of $2.71 per share was 8% above analysts’ consensus estimates.

Company Overview

Tracing its roots back to 1890 when the firm was established in St. Louis, Stifel Financial (NYSE:SF) is a financial services firm that provides wealth management, investment banking, and institutional brokerage services to individuals, corporations, and institutions.

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.

Stifel Financial competes with larger financial services firms like Morgan Stanley (NYSE:MS), Raymond James Financial (NYSE:RJF), and Jefferies Financial Group (NYSE:JEF), as well as regional investment banks and wealth management firms.

A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Stifel’s revenue grew at a decent 8.1% compounded annual growth rate over the last five years. Its growth was slightly above the average financials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Stifel’s annualized revenue growth of 12.8% 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, Stifel reported year-on-year revenue growth of 14.4%, and its $1.56 billion of revenue exceeded Wall Street’s estimates by 2.9%.

Assets Under Management (AUM) is the cornerstone of a financial firm's investment division, representing all client capital under its stewardship. Management fees on this AUM create reliable, recurring revenue that maintains stability even when investment performance struggles, though prolonged poor returns can eventually affect asset retention and growth.

Stifel’s AUM has grown at an annual rate of 13.5% over the last five years, a step above the broader financials industry and faster than its total revenue. When analyzing Stifel’s AUM over the last two years, we can see that growth accelerated to 16.4% annually. Fundraising or short-term investment performance were net contributors for the company over this shorter period since assets grew faster than total revenue. But again, we put less weight on asset growth given how lumpy and cyclical it can be.

Stifel’s AUM punched in at $224.5 billion this quarter. This print was 17.1% higher than the same quarter last year.

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.

This is because for financials businesses, interest income and expense should be factored into the definition of profit but taxes - which are largely out of a company's control - should not.

Over the last five years, Stifel’s pre-tax profit margin has risen by 1.6 percentage points, going from 22.5% to 15.8%. Expenses have stabilized more recently as the company’s pre-tax profit margin was flat on a two-year basis.

In Q4, Stifel’s pre-tax profit margin was 19.7%. This result was in line with 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.

Stifel’s unimpressive 8.5% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

Stifel’s two-year annual EPS growth of 20.8% was great and topped its 12.8% two-year revenue growth.

In Q4, Stifel reported adjusted EPS of $2.71, up from $2.23 in the same quarter last year. This print beat analysts’ estimates by 8%. Over the next 12 months, Wall Street expects Stifel’s full-year EPS of $6.86 to grow 41.8%.

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, Stifel has averaged an ROE of 13.4%, healthy for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This is a bright spot for Stifel.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Stifel has averaged a Tier 1 capital ratio of 14.8%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

It was good to see Stifel beat analysts’ EPS expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 2.8% to $129.88 immediately following the results.

Updated: January 28, 2026 at 7:35 AM EST

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

Stifel has a few positive attributes, but it doesn’t top our wishlist. First off, its revenue growth was decent over the last five years and is expected to accelerate over the next 12 months. And while its declining pre-tax profit margin shows the business has become less efficient, its AUM growth was solid over the last five years. On top of that, its above-average ROE suggests its management team has made good investment decisions.

Stifel’s P/E ratio based on the next 12 months is 13x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $139.75 on the company (compared to the current share price of $129.88).