(PJC) Piper Jaffray Companies – 46X current-year earnings, a steep premium to the overall market

August 11th, 2009

Piper Jaffray Companies (PJC) has rebounded nicely from its recent low as the company’s major business segments post strong revenue growth from year-over-year.

Company Description

Piper Jaffrey Companies provides investment banking, sales and research services in the financial sector worldwide. The company was founded in 1895 and has a market cap of $917 million.

Shares of PJC have taken flight over the last few months as the financial sector and overall economy have begun to heal. The company’s strong second-quarter results, reported on July 22, showed the company moving back into profitability from the previous year.

Second-Quarter Results

Sales were up 12% from last year to $216.2 million. Earnings were also strong, coming in at 59 cents per share, 20 cents better than the Zacks Consensus Estimate.

A couple of the company’s largest business segments rebounded nicely after dipping lower last year. Investment banking was up 79% to $63 million, while institutional sales and trading was up 17% to $65.6 million.

Estimates Surge

After the company’s solid performance, estimates surged. The current year jumped from -17 cents to $1.00 per share. The next-year estimate is bullish, pegged at $1.73, a 73% growth projection.

Valuation

The optimism has worked its way into Piper’s share price, trading at 46X current-year earnings, a steep premium to the overall market.

The Chart

Shares of PJC have more than doubled in the last 4 months, rallying from less than $20 in early March to a recent high above $49. Take a look below.

Zacks Investment Research
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