Piper Sandler Companies (NYSE: PIPR)

Sector: Financial Services Industry: Capital Markets CIK: 0001230245
Market Cap 5.68 Bn
P/B 4.43
P/E 24.04
P/S 3.31
ROIC (Qtr) 16.38
Div Yield % 1.83
Rev 1y % (Qtr) 33.29
Total Debt (Qtr) 87.01 Mn
Debt/Equity (Qtr) 0.07

About

Piper Sandler Companies, also known by its stock symbol PIPR, is a prominent player in the investment banking and institutional securities industry. Established in 1895, the company has built a strong reputation over the years by offering a diverse range of products and services to corporations, private equity groups, public entities, non-profit entities, and institutional investors, both in the United States and internationally. Piper Sandler's primary business activities revolve around investment banking, institutional sales and trading, and...

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Price action

Investment thesis

Bull case

  • Strong tangible asset base of 1.80B provides 20.65x coverage of total debt 87.01M, indicating robust asset backing and low credit risk.
  • Strong free cash flow of (19.05M) provides 2.10x coverage of acquisition spending (9.09M), indicating disciplined M&A strategy.
  • Strong tangible asset base of 1.80B provides 4.25x coverage of intangibles 422.62M, indicating robust asset quality.
  • Cash position of 114M fully covers payables of 58.09M by 1.96x, showing strong vendor relationship management.

Bear case

  • Operating cash flow of 20.66M barely covers its investment activities of (48.81M), with a coverage ratio of -0.42, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 20.66M provides thin coverage of dividend payments of (111.89M) with a -0.18 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 114M provide limited coverage of acquisition spending of (9.09M), which is -12.54x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 20.66M shows concerning coverage of stock compensation expenses of 108.08M, with a 0.19 ratio indicating potential earnings quality issues.
  • Free cash flow of (19.05M) provides weak coverage of capital expenditures of 39.72M, with a -0.48 ratio suggesting additional external financing needs for growth initiatives.

Peer comparison

Companies in the Capital Markets
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GS Goldman Sachs Group Inc 284.23 Bn 17.94 4.84 911.32 Bn
2 MS Morgan Stanley 279.63 Bn 17.97 4.05 353.12 Bn
3 SCHW Schwab Charles Corp 179.33 Bn 23.09 7.83 27.59 Bn
4 HOOD Robinhood Markets, Inc. 106.92 Bn 48.73 25.43 0.00 Bn
5 CRCL Circle Internet Group, Inc. 40.97 Bn 261.00 24.22 0.15 Bn
6 IBKR Interactive Brokers Group, Inc. 28.23 Bn 30.79 4.75 28.43 Bn
7 LPLA LPL Financial Holdings Inc. 27.60 Bn 33.13 1.77 7.52 Bn
8 FUTU Futu Holdings Ltd 22.89 Bn 18.13 8.54 1.75 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.54 1.07
EV to Cash from Ops. EV/CFO 272.88 15.33
EV to Debt EV to Debt 64.81 21.89
EV to EBIT EV/EBIT 18.74 -0.80
EV to EBITDA EV/EBITDA 16.75 11.20
EV to Free Cash Flow [EV/FCF] EV/FCF -295.97 43.08
EV to Market Cap EV to Market Cap 0.99 -0.05
EV to Revenue EV/Rev 3.28 12.82
Price to Book Value [P/B] P/B 4.43 3.09
Price to Earnings [P/E] P/E 24.04 6.20
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.11 4.22
Dividend Payout Ratio % Div Payout % (Qtr) 39.20 10.37
Dividend per Basic Share Div per Share (Qtr) 5.65 0.70
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -495.61 -8.68
Interest Coverage Interest Coverage 0.00 37.53
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -346.72 -12,429.64
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -67.45 1,588.78
Dividend Growth (1y) % Div 1y % (Qtr) 63.77 4.88
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 44.09 270.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 21.24 333.57
EBIT Growth (1y) % EBIT 1y % (Qtr) 38.83 3,103.22
EBT Growth (1y) % EBT 1y % (Qtr) 38.83 3,039.53
EPS Growth (1y) % EPS 1y % (Qtr) 36.26 24.25
FCF Growth (1y) % FCF 1y % (Qtr) -103.38 -80.08
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 13.46 51.33
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.77 0.42
Cash Payout Ratio Cash Payout (Qtr) 1.85 -0.08
Cash Ratio Cash Ratio 0.00 2.01
Current Ratio Current Ratio 0.00 3.47
Debt to Equity Ratio Debt/Equity (Qtr) 0.07 1.46
Interest Cover Ratio Interest Cover Ratio 0.00 37.53
Times Interest Earned Times Interest Earned 0.00 37.53
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 19.10 76.68
EBIT Margin % EBIT Margin % (Qtr) 17.52 46.81
EBT Margin % EBT Margin % (Qtr) 17.52 58.57
Gross Margin % Gross Margin % (Qtr) 100.00 53.60
Net Profit Margin % Net Margin % (Qtr) 13.80 29.41