Leave it to a securities firm from the Windy City to blow the doors off the local competition.

Everen Capital

(EVR) - Get Report

, parent of

Everen Securities

, a Chicago-based full-service brokerage firm, jumped to first from sixth among all Midwest securities firms in underwriting public domestic new issues last year, according to

Securities Data

.

Everen raised $3.8 billion as lead manager in debt and equity deals, quadrupling its Midwest market share to more than 22%. The firm leapfrogged a fleet of other firms, including better-capitalized competitors such as

Bank One

(ONE) - Get Report

and more recognized names such as

A.G. Edwards

(AGE) - Get Report

.

"Everen is a firm that is dominant in the Midwest region," says Lauren Smith, an analyst for

Putnam Lovell de Guardiola & Thornton

. "With more than 1,800 brokers, they have a presence in every market in the nation but the Southwest." Smith rates the stock a buy. Putnam Lovell hasn't performed underwriting for the company.

The company's stock has been on a bit of a roller coaster, and it's down about 5% since the beginning of the year. The stock was trading at about 21 3/8 Friday afternoon, about halfway between its 52-week high of 29 5/8 hit in July and its 52-week low of 15 in September. The current stock price gives Everen a market capitalization of about $780 million.

At this level, the stock is less expensive than other regional brokerage stocks, Smith says. The company has a trailing price-to-earnings ratio of just under 11, lower than the financial services/investment banking sector average of 18.7.

"It's a cheap stock that has shown both price and earnings momentum," says Martha Ortiz, portfolio manager for

Aronson & Partners

, a Philadelphia money manager. "The stock has been up

since last fall and recent returns have been positive." Aronson is long Everen stock in its

Quaker Small Cap Value

fund.

The company reported more than $755 million in net revenue last year, a 27% increase from the year before. The company earned $71.3 million, or $2.01 per share, which included a one-time $20 million net gain due to the sale of 80% of Everen's clearing business to

Bank of New York

(BK) - Get Report

. Without the gain, Everen earned $1.68 per share, up 24% from 1997.

The handful of analysts who cover the company rate it a buy or strong buy, and the consensus earnings estimate for the current quarter is 45 cents per share, an increase of 18% over the year-earlier period. The consensus estimates from

First Call

predict earnings will grow by 17% this year to $1.88 per share, and by another 20% to $2.25 per share next year. That would give Everen a P/E ratio of 11.7 for this year and 9.8 for next year.

Another plus that Putnam Lovell's Smith points out is that regional brokerages have been ripe for acquisition by larger commercial banks trying to get into the underwriting business.

"A lot of larger players are still looking to increase the number of brokers and grow their capital base -- Everen could be a target," Smith says. The company manages more than $63 billion in over half a million client accounts -- an attractive lure for a bank or larger brokerage looking to increase its assets under management. Everen declined to comment on whether it would sell.

The company has 35.5 million outstanding shares, and -- including an employee stock ownership plan -- about 60% are held by employees and insiders. That creates a little bit of concern among some investors about the scarcity of shares, Smith says. This situation also makes it unlikely that Everen would offer up a large stock buyback anytime soon.

Also on the down side, Everen is more susceptible to the swings of the overall stock market since it's a securities firm and brokerage, and it could see losses in any serious market downturn. Aronson's Ortiz says she realizes that's a concern, but her fund and most others will always hold some stocks in the financial sector. She adds that because Everen has posted positive earnings even when its rivals have not, it is a good stock to hold even during bad times.