Net Interest Income Providing Some Relief for Stifel in Tough Environment; Shares Undervalued

Stifel Financial’s wealth management business and its related net interest income are providing some relief in the currently tough capital markets environment. The company reported net income to common shareholders of $142 million, or $1.21 per diluted share, on $1.05 billion of net revenue. Net revenue decreased 8.7% from the previous year and 5.7% sequentially with the majority of the decline stemming from the company’s institutional group where revenue fell about 30% from an elevated 2021 level and 17% sequentially. Pretax earnings fell 19.8% from the previous year and 5.8% sequentially. We don’t anticipate making a material change to our $83 fair value estimate for no-moat-rated Stifel and assess shares as undervalued.