Stifel Financial Corp. (NYSE:SF) and Raymond James Financial, Inc. (NYSE:RJF) are both Financial companies that recently hit new highs. Many investors are wondering what to do with these names trading at such extreme levels. To determine if one is a better investment than the other, we will compare the two across growth, profitability, risk, return, dividends, and valuation measures.
Stifel Financial Corp. (NYSE:SF) operates in the Investment Brokerage – Regional segment of the Financial sector. The company has grown sales at a 13.30% annual rate over the past five years, putting it in the high growth category. SF has a net profit margin of 7.10% and is more profitable than the average company in the Investment Brokerage – Regional industry. In terms of efficiency, SF has an asset turnover ratio of 0.12. This figure represents the amount of revenue a company generates per dollar of assets. SF’s financial leverage ratio is 5.7, which indicates that the company’s asset base is primarily funded by debt. Company’s return on equity, which is really just the product of the company’s profit margin, asset turnover, and financial leverage ratios, is 7.60%, which is worse than the Investment Brokerage – Regional industry average ROE.
Stifel Financial Corp. (SF) pays out an annual dividend of 0.40 per share. At the current valuation, this equates to a dividend yield of 0.69%. The company has a payout ratio of 3.40%. SF’s current dividend therefore should be sustainable. Stock’s free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is 5.97. All else equal, companies with higher FCF yields are viewed as cheaper. Company trades at a P/E ratio of 23.23, and is more expensive than the average stock in the Investment Brokerage – Regional industry. The average investment recommendation for SF, taken from a group of Wall Street Analysts, is 3.00, or a hold.
Over the past three months, Stifel Financial Corp. insiders have been net buyers, dumping a net of -115,924 shares. This implies that insiders have been feeling relatively bearish about the outlook for SF. Insider activity and sentiment signals are important to monitor because they can shed light on how “risky” a stock is perceived to be at it’s current valuation. Knowing this, it makes sense to look at beta, a measure of market risk. SF has a beta of 1.69 and therefore an above average level of market volatility.
Raymond James Financial, Inc. (NYSE:RJF) operates in the Investment Brokerage – Regional segment of the Financial sector. RJF has increased sales at a 10.90% CAGR over the past five years, and is considered a high growth stock. The company has a net profit margin of 9.70% and is more profitable than the average Investment Brokerage – Regional player. RJF’s return on equity of 11.90% is better than the Investment Brokerage – Regional industry average.
Raymond James Financial, Inc. (RJF) pays a dividend of 0.88, which translates to dividend yield of 1.00% based on the current price. Stock has a payout ratio of 19.40%. According to this ratio, RJF should be able to continue making payouts at these levels. The company trades at a free cash flow yield of -0.98 and has a P/E of 20.45. Compared to the average company in the 21.41 space, RJF is relatively cheap. The average analyst recommendation for RJF is 2.50, or a hold.
Raymond James Financial, Inc. insiders have sold a net of -240,925 shares during the past three months, which implies that the company’s top executives have been feeling bearish about the stock’s outlook. Finally, RJF’s beta of 1.72 indicates that the stock has an above average level of market risk.
Stifel Financial Corp. (NYSE:RJF) scores higher than Raymond James Financial, Inc. (NYSE:SF) on 7 of the 13 measures compared between the two companies. RJF has the better fundamentals, scoring higher on profitability, leverage and return metrics.