Stifel surges on record earnings as IB revenue jumps 50%
Wealth manager beats estimates by 42% and announces 11% dividend increase with stock split
Stifel Financial Corp. shares climbed in early Wednesday trading after the wealth manager reported record quarterly results driven by a 50% surge in investment banking revenue and a record expansion of client assets under management.
The St. Louis-based firm reported fourth-quarter net revenues of $1.56 billion, surpassing analyst estimates of $1.33 billion by 17.5%, while non-GAAP earnings per share of $2.63 crushed the consensus projection of $1.85 by 42.5%. On a GAAP basis, net income reached $255 million, or $2.31 per diluted share, up from $234.7 million a year earlier.
The performance marked a dramatic acceleration for the regional investment bank, which has been capitalizing on increased deal-making activity and expanding its wealth management franchise. Investment banking revenue soared 50% year-over-year, while wealth management assets climbed to a record $551.9 billion, representing 10% growth.
"We delivered exceptional results across our businesses in the fourth quarter, reflecting the strength of our platform and the dedication of our colleagues," the company said in its earnings announcement. The firm's non-GAAP pre-tax margin expanded to 22.3%, while return on tangible common equity reached 31.1%, underscoring the profitability of its diversified business model.
Buoyed by the strong performance, Stifel's board approved an 11% increase in its quarterly dividend to $0.51 per share, beginning in the first quarter of 2026. The company also announced a three-for-two stock split, effective February 26 for shareholders of record February 12, which will reduce the quarterly dividend payment to $0.34 per share on a post-split basis.
For the full year 2025, Stifel achieved record net revenues of $5.53 billion, up from $4.97 billion in 2024, demonstrating the firm's momentum in an improving capital markets environment. The results contrast with broader industry headwinds that have weighed on some competitors, positioning Stifel as an outperformer in the mid-tier investment banking space.
Analysts had grown increasingly bullish on Stifel ahead of the report. Citizens JMP analyst Devin Ryan maintained a "Market Outperform" rating and raised his price target to $155 on January 12, reflecting confidence in the firm's ability to capitalize on improving market conditions. JP Morgan also increased its target to $136 on January 8, while maintaining a Neutral rating.
However, not all analysts are convinced. TD Cowen downgraded the stock from Buy to Hold on January 14, citing valuation concerns despite the positive fundamental outlook. The stock currently trades at $126.34, with a consensus "Moderate Buy" rating from 12 brokerages and an average price target of $135.18, according to MarketBeat data.
Stifel's strong quarter reflects broader trends in the wealth management and investment banking sectors, where firms have benefited from improved deal flow and growing client assets. The firm's diversified revenue streams, spanning wealth management, institutional trading, and investment banking, have provided stability amid market volatility.
Looking ahead, Stifel's management expressed optimism for 2026, though they did not provide specific guidance. The firm's chief equity strategist Barry Bannister recently forecast approximately 10% total return for the S&P 500 in 2026, suggesting expectations for continued economic expansion driven by technology advances, particularly in artificial intelligence, alongside supportive policy conditions.
The company, which maintains 89.4% institutional ownership, faces both opportunities and challenges as it competes with larger full-service banks and specialized wealth managers for client assets and investment banking mandates. With a price-to-earnings ratio of 22.8 on a trailing basis and 18.9 times forward earnings, investors will be watching whether Stifel can sustain its recent growth trajectory.