The market continues to be in a perilous situation, flirting with potentially waterfalling lower. It might not take too much of a push to initiate outsized losses. With the possibility of a crash, we will stick with the theme we’ve followed for the last two weeks. We’ll continue to identify companies with insider buying to put on a candidates list for stocks to buy when the market slide comes to an end.
This week we found a financial company that’s expected to increase earnings handsomely in 2023 with a Chief Executive Officer (CEO) with a history of being on the right side of the trade.
Stifel Financial Corp. (SF) makes the list this week. Stifel is a financial services and bank holding company that provides retail and institutional wealth management, and investment banking services to individual investors, corporations, municipalities, and institutions.
Stifel CEO Ronald Kruszewski purchased 10,000 of the SF stock at $61.935 for a $619,350 investment. (1) CEO Kruszewski is no stranger to buying and selling Stifel shares. He started selling at $53.15 in August 2009 and continued to sell through December 2016. In 2020, Kruszewski flipped the switch and bought 10,000 shares at $31.85; 11 months later he flipped the switch again and sold 100,000 shares at $58.50.
April was the latest flip of the switch with the aforementioned 10,000 share buy. So far, Kruszewski took the right side of the trade. We’ll see if he can do it again.
Wall Street sees SF shares substantially higher 12 months from now with a consensus price target of $94.25. (2) That’s 50% upside from SF recent closing price of $62.66, not including the current dividend of $1.20 per share.
Analysts see lots of upside in earning per share (EPS) as well with estimates for 2023 at $8.41 compared to expectations of $7.14 this year. That’s projected growth of 17.78%. Meanwhile, the consensus is for sales to climb from $4.42 billion in 2022 to $5.31 next year (10.17% growth). (3)
Stifel Financial is currently valued inline with its peer group, trading at 8.9 times earnings (P/E) compared to the industry’s average P/E of 9 and at 1.6 times sales (P/S) compared to 1.42 for the industry. Those numbers aren’t too far from the SF’s averages for the last five years of 11.31 and 1.35, for P/E and P/S respectively.
Let’s do what we always do, create potential price points based on Wall Street’s 2023 sales and earnings forecasts and recent P/S and P/E ratios.
Price to Earnings (P/E):
Industry average: $75.69
SF’s five-year average: $95.18
Price to Sales (P/S):
Industry average: $70.75
SF’s five-year average: $67.35
OVERALL: Stifel Financial Corp. (SF) could have limited upside potential based on 2023’s sales forecast and the company’s five-year average P/S ratio. On the other hand, once the stock market stops falling, SF could have decent upside according to Wall Street’s consensus EPS estimate and the financial company’s recent P/E history.
Investors with an average risk profile and a time horizon of at least 18 months might consider adding Stifel Financial Corp. (SF) to their watchlist of potential buy candidates.
1 – https://www.secform4.com/insider-trading/1203674.htm
2 – https://finance.yahoo.com/quote/SF?p=SF
3 – https://finance.yahoo.com/quote/SF/analysis?p=SF