NEW YORK (TheStreet) -- Shares of Stifel Financial Corp. (SF) - Get Report are higher by 1.08% to $51.65 in late afternoon trading on Friday, as Bloomberg reports that the financial holding company is in talks to acquire rival Sterne Agee in a merger of the two largest U.S. brokerages outside of New York.

An announcement regarding the transaction could be announced within days, sources told Bloomberg.

Since 2005 Stifel has acquired over 10 banking and brokerages business.

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Stifel's most recent major transaction was in 2012 when it purchased one of its smaller rivals, KBW, for $575 million.

If a deal were to be announced Sterne would be relinquishing its independence after it more than doubled its credit trading and sales team in less than four years, Bloomberg added.

Last year Sterne successfully ousted and sued its former CEO Jim Holbrook Jr. after accusing him of misusing corporate assets.

Separately, TheStreet Ratings team rates STIFEL FINANCIAL CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate STIFEL FINANCIAL CORP (SF) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 12.4%. Since the same quarter one year prior, revenues slightly increased by 9.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, STIFEL FINANCIAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • STIFEL FINANCIAL CORP's earnings per share declined by 48.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, STIFEL FINANCIAL CORP increased its bottom line by earning $2.33 versus $2.31 in the prior year. This year, the market expects an improvement in earnings ($2.79 versus $2.33).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • Net operating cash flow has declined marginally to $341.89 million or 0.39% when compared to the same quarter last year. Despite a decrease in cash flow of 0.39%, STIFEL FINANCIAL CORP is still significantly exceeding the industry average of -94.65%.
  • You can view the full analysis from the report here: SF Ratings Report