This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Can Regional Brokers Keep Outperforming?

Stocks in this article: SFSWSRJF

So how long can Stifel be called "regional?" Formerly known for its Midwest focus, Stifel now operates in 36 states and the District of Columbia. It has three European offices.

Dallas-based SWS has even less Wall Street coverage (two sell-side analysts) than Stifel (four sell-side analysts). It's stock gained 24% for the 12 months ended Feb. 5. It's five year-return isn't as good as Stifel's, but who's arguing with a split-adjusted gain of about 80%?

SWS just released October-December results in which earnings per share of 33 cents beat estimates by 6 cents. Revenue rose to $100 million vs. $72 million for the same period in 2007, thanks partly to a brokerage acquisition.

"We believe that revenue and EPS growth will likely be driven by acquisition," says a recent report by Keefe Bruyette & Woods.

SWS feels confident enough to avoid TARP money. "It's our opinion that we can keep the Bank well capitalized without the risk and uncertainties of the terms for accepting the government money," CEO Donald Hultgren told analysts during a Feb. 4 conference call. (Stifel Financial isn't seeking TARP money either). SWS subsidiaries include Southwest Securities, SWS Financial Services and the banking unit Southwest Securities FSB. The company operates in 50 states.

SWS could be under pressure for the rest of 2009 and 2010 due to the recession's impact on investors in general and to the fear that the Texas economy will weaken, says KBW. That would hurt SWS's bank subsidiary, municipal finance business and its commissions.

"With energy prices well below their peak levels of 2008, we believe that the state's economy will begin to weaken and could present concerns for SWS's businesses," says a mid-January KBW report maintaining a market perform rating. KBW's analysts don't own shares, but their firm has had a recent noninvestment banking relationship.

Raymond James Financial is larger, with market cap of $2.4 billion, than Stifel and SWS combined. It can brag that it beat the big guys and the S&P 500 over the last 12 months, but its stock was still down about 20%.

3 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,380.41 +263.17 1.63%
S&P 500 1,886.76 +24.00 1.29%
NASDAQ 4,258.4380 +41.0480 0.97%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs