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Piper Sandler (PIPR)
NYSE:PIPR
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Piper Sandler
(NYSE:PIPR)
66Neutral
Positive Factors
Expansion Strategy
The firm has heavily invested in talent to expand its platform, particularly in the Advisory business, which is expected to drive incremental growth.
Financial Performance
Piper Sandler delivered a strong quarter with adjusted revenues significantly above estimates, indicating strong company performance.
Market Position
Piper Sandler is building a defensible moat in the middle markets given its level of scale and materially increasing relevance to private equity clients.
Negative Factors
Market Volatility
Timely investor meetings with Piper Sandler management address recent market volatility, adding some near-term uncertainty.
Transaction Impact
The acquisition of Aviditi Advisors is important but relatively small for the company.
Valuation Concerns
Despite strong stock performance over the past two years, the current valuation reasonably reflects the outlook, leading to a Market Perform rating.
Piper Sandler (PIPR) vs. S&P 500 (SPY)
Market Cap
$4.59B
Dividend Yield0.96%
Average Volume (3M)135.22K
Price to Earnings (P/E)25.3
Beta (1Y)1.56
Revenue Growth12.29%
EPS Growth99.57%
CountryUS
Employees1,805
SectorFinancial
Sector Strength84
IndustryFinancial - Capital Markets
Share Statistics
EPS (TTM)10.22
Shares Outstanding17,730,430
10 Day Avg. Volume149,464
30 Day Avg. Volume135,217
Financial Highlights & Ratios
PEG Ratio0.25
Price to Book (P/B)N/A
Price to Sales (P/S)3.10
Price to Cash Flow (P/CF)7.00
P/FCF Ratio6.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$330.00Price Target Upside22.87% Upside
Rating ConsensusHold
Number of Analyst Covering2
Piper Sandler Business Overview & Revenue Model
Company DescriptionPiper Sandler Companies operates as an investment bank and institutional securities firm that serves corporations, private equity groups, public entities, non-profit entities, and institutional investors in the United States and internationally. The company offers investment banking and institutional sales, trading, and research services for various equity and fixed income products. It provides advisory services, such as mergers and acquisitions, equity private placements, and debt and restructuring advisory; raises capital through equity and debt financings; underwrites municipal issuances; and offers municipal financial advisory and loan placement services, as well as various over-the-counter derivative products. The company also offers public finance investment banking services that focus on state and local governments, and cultural and social service non-profit entities, as well as the education, healthcare, hospitality, senior living, and transportation sectors. In addition, it provides equity and fixed income advisory and trade execution services for institutional investors, and government and non-profit entities. Further, the company is involved in the alternative asset management funds merchant banking and healthcare to invest firm capital and to manage capital from outside investors, as well as trading activities. The company was formerly known as Piper Jaffray Companies and changed its name to Piper Sandler Companies in January 2020. Piper Sandler Companies was founded in 1895 and is headquartered in Minneapolis, Minnesota.
How the Company Makes MoneyPiper Sandler makes money primarily through its investment banking and institutional securities operations. The company's revenue streams include advisory fees from mergers and acquisitions, underwriting fees from debt and equity offerings, and trading commissions from securities transactions. Additionally, Piper Sandler generates revenue from asset management fees, which are based on the assets under management (AUM) and performance of the investment funds. The company's earnings are also influenced by market conditions and economic trends, as well as its strategic partnerships and client relationships in various industries.
Piper Sandler Financial Statement Overview
Summary
Piper Sandler exhibits a solid financial performance, evidenced by strong revenue growth, robust profitability margins, and a stable balance sheet with no debt and strong equity. Cash flow metrics indicate healthy cash generation, although attention should be paid to fluctuations in gross profit margins.Income Statement
Piper Sandler has demonstrated a strong income statement performance with a notable increase in revenue from $1.35 billion in 2023 to $1.53 billion in 2024, reflecting a revenue growth rate of approximately 13.6%. The gross profit margin in 2024 was approximately 34.4%, while the net profit margin was around 11.8%. The EBIT and EBITDA margins were both approximately 31.7%. These margins indicate robust profitability, although the decrease in gross profit from 2023 is a point of concern.75
Positive
Balance Sheet
The balance sheet reveals a strong financial position with no total debt as of 2024, significantly improving from the prior year. The debt-to-equity ratio is 0, indicating no leverage, while the equity ratio stands at 54.4%, showing a solid equity base. Return on equity (ROE) is approximately 14.8%, which is healthy for the industry, reflecting efficient use of equity to generate profit.80
Positive
Cash Flow
Piper Sandler's cash flow statement shows a positive trajectory, with free cash flow growing from $265.58 million in 2023 to $297.76 million in 2024, translating to a growth rate of approximately 12.1%. The operating cash flow to net income ratio is 1.73, indicating strong cash generation relative to net profits. However, the free cash flow to net income ratio is a high 1.64, suggesting the company is generating significant free cash flow relative to net income.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.53B | 1.35B | 1.37B | 1.97B | 1.18B | Gross Profit |
| 527.42M | 1.21B | 307.79M | 587.17M | 220.24M | EBIT |
| 485.18M | 312.55M | 168.98M | 389.66M | 59.70M | EBITDA |
| 251.16M | 0.00 | 326.48M | 330.37M | 0.00 | Net Income Common Stockholders |
| 181.11M | 85.49M | 110.67M | 278.51M | 40.50M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 482.83M | 383.10M | 365.62M | 970.97M | 507.94M | Total Assets |
| 2.26B | 2.14B | 2.18B | 2.57B | 2.00B | Total Debt |
| 98.82M | 164.16M | 234.77M | 214.63M | 294.48M | Net Debt |
| -384.01M | -218.93M | -130.85M | -756.34M | -213.46M | Total Liabilities |
| 840.16M | 841.51M | 927.53M | 1.34B | 1.07B | Stockholders Equity |
| 1.23B | 1.09B | 1.05B | 1.06B | 829.42M |
| Cash Flow | Free Cash Flow | |||
| 297.76M | 265.58M | -255.51M | 686.51M | 762.18M | Operating Cash Flow |
| 313.25M | 275.63M | -224.91M | 707.09M | 779.76M | Investing Cash Flow |
| -31.77M | -10.05M | -127.10M | -20.58M | -435.00M | Financing Cash Flow |
| -180.61M | -249.59M | -250.06M | -223.12M | -87.56M |
Piper Sandler Technical Analysis
Neutral
268.57
Price Trends
285.39
Negative
299.30
Negative
276.93
Negative
Market Momentum
-8.18
Negative
49.65
Neutral
91.11
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PIPR, the sentiment is Neutral. The current price of 268.57 is above the 20-day moving average (MA) of 262.00, below the 50-day MA of 285.39, and below the 200-day MA of 276.93, indicating a neutral trend. The MACD of -8.18 indicates Negative momentum. The RSI at 49.65 is Neutral, neither overbought nor oversold. The STOCH value of 91.11 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PIPR.
Piper Sandler Risk Analysis
Piper Sandler disclosed 32 risk factors in its most recent earnings report. Piper Sandler reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Piper Sandler Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $4.13B | 17.14 | 51.51% | 4.36% | 23.88% | ― | |
73 Outperform | $8.09B | 22.77 | 23.03% | 1.55% | 22.67% | 47.20% | |
71 Outperform | $10.60B | 15.71 | 13.32% | 1.71% | 15.33% | 46.64% | |
69 Neutral | $29.70B | 13.78 | 19.07% | 1.31% | 13.79% | 28.57% | |
67 Neutral | $193.77B | 15.12 | 13.16% | 3.02% | 7.16% | 53.77% | |
66 Neutral | $4.59B | 25.31 | 15.66% | 0.96% | 12.29% | 99.57% | |
64 Neutral | $14.46B | 10.12 | 8.75% | 4.25% | 17.00% | -11.86% |
* Financial Sector Average
Performance Comparison
PIPR
Piper Sandler
268.57
78.34
41.18%
EVR
Evercore Partners
216.84
27.00
14.22%
LAZ
Lazard
47.07
8.34
21.53%
MS
Morgan Stanley
124.27
36.06
40.88%
RJF
Raymond James Financial
144.96
20.27
16.26%
SF
Stifel Financial
102.18
27.40
36.64%
Piper Sandler Earnings Call Summary
Earnings Call Date: Jan 31, 2025 | % Change Since: -12.23% | Next Earnings Date: Apr 25, 2025
Earnings Call Sentiment Positive
The earnings call highlights a strong financial performance for 2024, with record revenues in several segments and positive growth in advisory and corporate financing. However, challenges in the healthcare and depository sectors, along with increased expenses, present areas of concern. Overall, the positive achievements slightly outweigh the challenges.Highlights
Record Quarterly Revenues
The fourth quarter of 2024 was the best quarter of the year, with adjusted net revenues of $499 million, marking the second highest quarterly revenues on record.
Strong Full Year Performance
For the full year 2024, adjusted net revenues were $1.5 billion, with a 16% growth compared to 2023 and a 37% increase in net income.
Advisory Services Success
Advisory services accounted for over half of firmwide net revenues, with 2024 being the second strongest advisory year on record. The firm completed 288 advisory transactions and ranked as a top three advisor on announced US M&A deals under $1 billion.
Corporate Financing Growth
Corporate financing revenues increased by 33% from 2023, reaching $174 million, driven by more equity financings.
Public Finance Growth
Municipal financing revenues increased by 47% from 2023, marking the second strongest year on record.
Equity Brokerage Record
Equity brokerage revenues reached a record $215 million for the full year, with a broad-based performance across high touch, electronic, and derivatives trading.
Lowlights
Healthcare Sector Challenges
The healthcare sector faced challenges due to regulatory scrutiny and tough market conditions, resulting in a difficult year.
Depository Sector Difficulties
The depository sector experienced headwinds, with a tough year for completed depository M&A transactions.
Increased Non-Compensation Expenses
Non-compensation expenses for 2025 are expected to be higher due to increased occupancy costs, inflationary pressures, and the relocation of the Minneapolis headquarters.
Company Guidance
During the Piper Sandler Companies' Fourth Quarter and Full Year 2024 Earnings Conference Call, management provided guidance highlighting significant achievements and future expectations. The firm reported adjusted net revenues of $499 million for the fourth quarter, marking their best quarter of 2024 and second highest quarterly revenues on record, with a 24.4% operating margin and an adjusted EPS of $4.80. For the full year, they achieved adjusted net revenues of $1.5 billion, a 19.7% operating margin, and an adjusted EPS of $12.69. Piper Sandler experienced 16% revenue growth over 2023, driven by a diverse range of industry teams, resulting in a 37% increase in net income. The company's advisory services generated $809 million in revenues for the year, with over half of firmwide net revenues coming from this sector for the fourth consecutive year. The firm completed 288 advisory transactions and ranked as a top three advisor in announced US M&A deals under $1 billion. Corporate investment banking revenues reached $983 million, up 17% from 2023, with sector gains led by financial services and record performance from the energy and power group. Looking ahead, Piper Sandler expects continued growth in advisory revenues and an increase in equity and debt financing activity in 2025, with a focus on expanding their geographic footprint and growing revenues from private equity clients. They aim to grow annual corporate investment banking revenues to $2 billion over the medium term.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.