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5 Reasons to Include Stifel Financial (SF) in Your Portfolio

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Stifel Financial Corp. (SF - Free Report) appears to be a promising bet now given its solid organic growth and efforts to expand inorganically. In addition, higher interest rates and improving economy are anticipated to further stabilize its top line.

Further, analysts seem to be optimistic about its prospects as the stock is witnessing upward estimate revisions. Over the last 30 days, the Zacks Consensus Estimate for the current year has risen nearly 3% to $5.70. Backed by these upward estimate revisions, the company currently sports a Zacks Rank #1 (Strong Buy).

Also, Stifel Financial has an impressive earnings surprise history. The bank delivered an average positive earnings surprise of 6.1% in the trailing four quarters.

Additionally, the stock has gained 18.3% in the past six months against the 3.5% decline recorded by the industry.

Why is Stifel Financial a Solid Pick?

Benefit from higher interest rates: With a higher interest-rate environment, brokerage firms are likely to engage in more investment activities as they earn interest income on un-invested cash in customer accounts. As Stifel Financial currently derives some portion of its revenues from net interest income, the company is set to benefit.

Inorganic growth strategies: Stifel Financial’s strong balance-sheet position enables it to undertake opportunistic expansion plans. This April, the company announced the acquisition of Mooreland Partners, a leading M&A and private capital advisory firm serving the global technology industry, with a view to fortify its presence in the Europe and Silicon Valley.

Strong organic growth: Stifel Financial’s net revenues witnessed an 8.2% compounded annual growth rate over the last five years, ending 2018. The company’s projected sales growth rates of 2.5% and 4.2% for 2019 and 2020, respectively, indicate continued upward momentum in revenues.

Earnings growth: Stifel Financial witnessed earnings growth of 17.4% over the last three-five years. Continuing the momentum, its earnings are expected to grow at the rate of 8% for 2019 and 8.8% for 2020.

In addition, the company’s long-term (three-five years) estimated EPS growth rate of 6% promises rewards for investors over the long run.

Superior Return on Equity (ROE): Stifel Financial’s ROE of 14.77%, compared with the industry average of 12.21%, highlights the company’s commendable position over its peers.

Other Stocks to Consider

Other stocks worth considering in the same industry include LPL Financial Holdings (LPLA - Free Report) , Raymond James Financial, Inc. (RJF - Free Report) and T. Rowe Price Group, Inc. (TROW - Free Report) . All these stocks flaunt a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for LPL Financial’s current-year earnings was revised 9.3% upward over the last 30 days. Also, its share price has seen a 6.1% rise in the past three months.

Raymond James’ earnings estimates have been revised 2% upward for the ongoing year, over the last 30 days. Also, in the past three months, its share price has increased 1.2%.

Earnings estimates for T. Rowe have moved up 9% for 2019, over the last 30 days. Also, its share price has seen a 6.2% rise in the past three months.

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