Greenhill & Co.

Greenhill & Co. (GHL - Snapshot Report) continues to distinguish itself from its Wall Street brethren by avoiding risky bets and growing its earnings. The company's share price has been rallying since July.

Company Description

Greenhill & Co., with its subsidiaries, operates as an independent investment banking firm in North America and Europe. The company was founded in 1996, has a market cap of $1.80 billion and is headquartered in New York, New York.

The shock waves reverberating across Wall Street have forced many investment banks to either declare bankruptcy or convert into deposit holding companies. Such is not the case with Greenhill, a company whose earnings have dropped in response to the economic climate, but still remain at very healthy levels.

Second-Quarter Results

Greenhill's second-quarter results, reported on July 31, were down from the same period last year, but impressive when compared to the competition. Revenue totaled $108.7 million, down from $140.6 million in the same period last year. Net income dropped to $28.7 million from $42.7 million last year. This produced earnings of $1.04 per share, ahead of analyst estimates of 68 cents per share.

The company noted that its revenue from advisory fees dropped 61% to $49.9 million. Greenhill said that it worked fewer deals in the quarter, and the deals it did work, were smaller in scale, inhibiting revenue production.

The CEO Speaks

Greenhill CEO Robert Greenhill provided some texture to the results, reinforcing the companies strong fundamentals, saying that, " In the twelve months since credit availability was sharply reduced and global transaction activity began to decline, Greenhill's revenue has remained strong...its balance sheet has remained transparent and unleveraged, and its return on equity has remained consistent with historic high levels."

Analyst Estimates

Analyst estimates have continued to rise, in spite of all the volatility engulfing the financial sector. The current-year estimate is up to $3.20 per share from $2.97 per share 90 days ago. The next-year estimate is pegged at $4.13 per share, a 29% earnings growth projection.

Based upon the current-year estimate, this stock is trading at a premium to the overall market, carrying a forward P/E multiple of just over 20X.

The Chart

Shares of GHL have been on the move for the past 3 months, advancing from just above $44 to a recent high above $92. Since then, this stock has pulled back, and is now pressuring a longer term trend line. Take a look below.