Underlying strength and solid prospects make Piper Jaffray Companies PJC a wise investment option. The company is well poised for revenue growth, driven by decent capital markets performance and acquisitions. Moreover, it has a solid balance sheet position.
The company’s Zacks Consensus Estimate for earnings has moved nearly 1% upward for both 2019 and 2020, over the past 60 days. Currently, the stock carries a Zacks Rank #2 (Buy).
Also, shares of Piper Jaffray have rallied 22.6% so far this year, outperforming the industry’s growth of 17.6%.
What Makes the Stock a Good Bet
Earnings strength: Over the past three to five years, Piper Jaffray witnessed earnings growth of 14.2%, outpacing the industry average of 12.2%. Continuing the momentum, the earnings growth rate is expected to be 2.5% and 13.9% for 2019 and 2020, respectively.
Revenue growth: Piper Jaffray’s revenues have seen a compounded annual growth rate of 4.9% over the last five years (2014-2018). The company’s strategic business restructuring efforts and decent performance of capital markets are expected to continue supporting the top line in the quarters ahead.
Also, Piper Jaffray’s deal to acquire Sandler O’Neill + Partners, L.P. will be accretive to earnings in 2020 and lead to revenue synergies. Its projected sales growth rate of 38.7% for 2020 indicates the same.
Steady capital deployment: Piper Jaffray’s ability to generate cash flows and enhance shareholder value through quarterly and special dividend payments and share repurchases is commendable. In November, the company announced repurchase authorization worth $150 million, which will be effective Jan 1, 2020 through Dec 31, 2021. Driven by a solid balance sheet position and earnings strength, the company’s capital deployment actions look sustainable.
Strong leverage: Piper Jaffray’s debt/equity ratio is nil against the industry’s average of 0.41. The relatively strong financial health of the company will help it perform better in an unstable economic environment compared with its peers.
Stock looks undervalued: Piper Jaffray looks undervalued when compared with the broader industry. Its current price/sales and price/book ratios are below the respective industry averages.
Also, the stock has a Value Score of A. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Other Stocks to Consider
Hilltop Holdings Inc.’s HTH 2019 earnings estimates have been revised 1.4% upward over the past 30 days. This Zacks Rank #1 company’s shares have jumped 36.2% so far this year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Encore Capital Group Inc’s ECPG earnings estimates for 2019 have been revised 4.1% upward over the past 30 days. So far this year, this Zacks #2 Ranked company’s shares have surged 54%.
Earnings estimates for Tradeweb Markets Inc. TW have moved 3.1% upward over the past 30 days for 2019. The company’s shares have rallied 23.3% so far this year. It carries a Zacks Rank of 2, at present.
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Piper Jaffray Companies (PJC) : Free Stock Analysis Report
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