Company Reports

At this stage, Stifel Financial's business prospects depend on the fate of its global wealth and asset management segment, which accounted for 65% of 2025 revenue and 77% of operating profit. Given this, it's little surprise the firm prioritizes growth in that segment and in Stifel Bancorp, which are fairly interdependent. The latter is predominantly funded by wealth management client deposits and derives a significant portion of its assets from security-based lending, margin lending, and mortgage lending to those customers, although it has recently developed a sizable external loan book as well, quietly amassing more than $40 billion in assets. Overall, we view this tack as appropriate, particularly considering the less profitable and more cyclical profile of the capital markets business.

Stifel Financial reported solid second-quarter results, with $1.45 billion in quarterly revenue representing 13% annual growth, while $1.42 in adjusted EPS was up 25% from the year-ago period. Shares traded up modestly in early July 22 trading.

At this stage, Stifel Financial's business prospects depend on the fate of its global wealth and asset management segment, which accounted for 65% of 2025 revenue and 77% of operating profit. Given this, it's little surprise the firm prioritizes growth in that segment and in Stifel Bancorp, which are fairly interdependent. The latter is predominantly funded by wealth management client deposits and derives a significant portion of its assets from security-based lending, margin lending, and mortgage lending to those customers, although it has recently developed a sizable external loan book as well, quietly amassing more than $40 billion in assets. Overall, we view this tack as appropriate, particularly considering the less profitable and more cyclical profile of the capital markets business.

Stifel Financial reported strong first-quarter earnings results, with net revenue growth of 15%, adjusted for a one-time gain on sale, and adjusted diluted EPS growth of 32%. The firm's institutional trading segment carried the day, generating 29% annual growth.

At this stage, Stifel Financial's business prospects depend on the fate of its global wealth and asset management segment, which accounted for 65% of 2025 revenue and 77% of operating profitability. Considering this, it's little surprise to see the firm prioritize growth in that segment and in Stifel Bancorp, which are fairly interdependent. The latter is predominately funded by wealth management client deposits and derives a significant portion of its assets from security-based lending, margin lending, and mortgage lending to those customers, although it has recently developed a sizable external loan book as well, quietly amassing more than $40 billion in assets. Overall, we view this tack as appropriate, particularly considering the less profitable and more cyclical profile of the capital markets business.

At this stage, Stifel Financial's business prospects depend on the fate of its global wealth and asset management segment, which accounted for 65% of 2025 revenue and 77% of operating profitability. Considering this, it's little surprise to see the firm prioritize growth in that segment and in Stifel Bancorp, which are effectively joined at the hip. The latter is funded by wealth management client deposits and derives a significant portion of its assets from security-based lending, margin lending, and mortgage lending to those customers. We view this tack as appropriate, particularly given a structurally weaker return profile in the capital markets business, which provides useful ecosystem services but grows less quickly and is intrinsically less profitable than core wealth management.

Shares in many public wealth management firms fell significantly during Feb. 10 trading as fears regarding AI disruption continue to spread, pushing beyond software and financial data companies into areas like wealth management, where disruptive risk remains significantly less clear.

Stifel Financial reported fourth-quarter 2025 earnings results, posting outstanding 99%, 56%, and 46% annual growth in equity capital markets, total underwriting, and advisory revenue, respectively, from the year-ago quarter.

At this stage, Stifel Financial's business prospects depend on the fate of its global wealth and asset management segment, which accounted for 65% of 2025 revenue and 77% of operating profitability. Considering this, it's little surprise to see the firm prioritize growth in that segment and in Stifel Bancorp, which are effectively joined at the hip. The latter is funded by wealth management client deposits and derives a significant portion of its assets from security-based lending, margin lending, and mortgage lending to those customers. We view this tack as appropriate, particularly given a structurally weaker return profile in the capital markets business, which provides useful ecosystem services but grows less quickly and is intrinsically less profitable than core wealth management.

Equitable, a small US-based wealth management firm, announced an agreement on Oct. 27 to acquire Stifel Financial's independent advisory business, with a planned closing in the first quarter of 2026.

We're initiating coverage of Stifel Financial, a diversified financial-services provider that derives roughly two-thirds of its revenue from wealth management and one-third from investment banking and trading.

At this stage, Stifel Financial's business prospects depend on the fate of its global wealth and asset management segment, which accounted for 67% of 2024 revenue and just shy of 85% of operating profitability. Considering this, it's little surprise to see the firm prioritize growth in that segment and in Stifel Bancorp, which are effectively joined at the hip. The latter is funded by wealth management client deposits and derives a significant portion of its assets from security-based lending, margin lending, and mortgage lending to those customers. We view this tack as appropriate, particularly considering recent challenges in the firm's capital markets business, which has struggled to generate leverage over fixed trading costs and to navigate a weaker period for deal flow in 2022-23.

We’re dropping our coverage of Stifel Financial. Morningstar provides research on approximately 1,500 publicly traded stocks, and we periodically revise our lists in response to client interest and changes in the business environment.

We expect Stifel's business to be increasingly driven by its asset management segment, with proportionally slower forecast growth from investment banking, institutional commissions, net interest income, and client commission (the latter is driven by a pivot toward asset-based rather than commission-based monetization models industrywide). We take a generally positive view of the firm's strategy, although acquisitions in its institutional group seem somewhat value dilutive, as this remains one of its most secularly pressured segments and is definitionally a volatile business.

Narrow-moat-rated Stifel Financial had record net revenue in 2024, and the environment looks to continue the current positive trend. The company reported full-year net income to common shareholders of $694 million, or $6.25 per diluted share, on $4.97 billion of net revenue. Net revenue increased 14.3% from the previous year with double-digit percentage gains across all revenue lines except for net interest income. We don’t anticipate making a material change to our $97 fair value estimate. We assess the shares as slightly overvalued.

We are increasing our fair value estimate to $97 per share from $86 for narrow-moat-rated Stifel Financial. Our fair value estimate implies an adjusted forward price/earnings multiple of about 13.5 times and a price/book ratio of 2 times. Of the net $11 increase in our fair value estimate, about $2 is from earnings since our previous valuation update, $2 is from client asset-related revenue, $5 is from higher projected institutional securities revenue, and $2 is from increasing our normalized operating margin for the company by 50 basis points.

Stifel Financial’s revenue and earnings took a step back in 2022 and 2023 as higher net interest income from tightening monetary policy couldn’t offset the effects of fear of a recession on client assets and investment banking revenue. About 20%-25% of the company’s revenue is from net interest income, which grew about 80% in 2022 to $900 million and another 25% in 2023 to $1.1 billion as the Federal Reserve increased interest rates. We currently forecast mid-single-digit revenue growth over the next several years as winds reverse, with capital markets revenue growth offsetting the effect of interest-rate headwinds on net interest income.

We believe the election of Donald Trump as president and Republican control of the US Senate and House will be largely positive for capital markets and investment-services firms. We will adjust our valuation models as government policies solidify, but with a rally of over 10% for multiple capital markets companies after the election, we believe potential tailwinds have largely been incorporated into share prices. We view most capital markets and investment-services firms as fairly valued to slightly overvalued.

Direct indexing in some form has existed for decades, but advances in technology have recently broadened its availability. With its arguable superiority to existing passive index funds and exchange-traded funds, investment industry leaders are positioning for the opportunities and threats it unleashes. While there have already been hundreds of billions of dollars dedicated to direct indexing offerings, numerous firms such as BlackRock and Morgan Stanley have acquired direct indexing capabilities in anticipation of further rapid growth.

Stifel and peer investment banks and wealth management firms have maintained their increase in revenue from weak 2023 levels, but the recovery stalled out a bit in the quarter. That said, we still believe that there’s much more room for improvement in Stifel’s investment banking business and that wealth management should continue to be a fairly steady performer. The company reported net income to common shareholders of $149 million, or $1.34 per diluted share, on $1.2 billion of net revenue. This was the company’s second highest quarterly revenue. Net revenue was up 17% from the previous year with broad increases in trading, investment banking, and investment management revenue. However, net revenue was only up 1% sequentially. We don’t anticipate making a material change to our $86 fair value estimate for no-moat-rated Stifel and assess shares are slightly overvalued.