Increasing Our FVE for Stifel to $71; Company Books Multiple Records

Stifel Financial reported multiple records in the fourth quarter and for full-year 2021. The company booked record net income of $789 million, or $6.66 per diluted share, on record net revenue of $4.7 billion for the year. Both the global wealth management and institutional groups reported record results, as client assets grew to a record $436 billion and 2021 was an exceptional year for investment banking and trading activity. This was Stifel’s 26th consecutive year of record net revenue, and while we believe results will continue to be fairly good, there’s a good probability that its record net revenue streak will cease in the next year or two, barring sizable acquisitions. Along with fourth-quarter earnings, the company also announced that it is increasing its dividend 100% to $0.30 per quarter. We are increasing our fair value estimate for no-moat Stifel to $71 from $64, with $2 of the increase coming from earnings since our previous valuation update and $5 from assuming that there is no significant increase in corporate tax rates.