SF Q3 Deep Dive: Wealth Management and Investment Banking Lead Strong Performance

Financial services firm Stifel Financial (NYSE:SF) announced better-than-expected revenue in Q3 CY2025, with sales up 16.7% year on year to $1.43 billion. Its non-GAAP profit of $1.95 per share was 5.7% above analysts’ consensus estimates.

Is now the time to buy SF? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Stifel delivered a positive third quarter, with results surpassing Wall Street expectations and the stock responding with a significant increase. Management credited broad-based strength in both Global Wealth Management and the Institutional Group, noting that client engagement and activity across equity and fixed income markets drove performance. CEO Ronald J. Kruszewski emphasized the company’s ongoing strategy of reinvestment and platform expansion, with record client assets and a surge in investment banking activity. CFO James Marischen highlighted that both fee-based revenues and net interest income contributed to the quarter’s improved operating margins.

Looking ahead, Stifel’s management pointed to strong investment banking pipelines, continued adviser recruiting, and growing deposit balances as key drivers for future results. CEO Kruszewski stated, “Milestones like $10 billion in annual revenue and $1 trillion in client assets are not distant goals,” underlining confidence in the company’s capacity to scale. However, management also cautioned that market cycles and external factors, such as government actions affecting IPO activity, could create temporary headwinds. The company remains focused on balancing growth with disciplined risk management and capital allocation.

Key Insights from Management’s Remarks

Management attributed the quarter’s outperformance to heightened client activity, expanding fee-based businesses, and improved market conditions supporting its main operating segments.

• Wealth Management Expansion: Stifel’s Global Wealth Management segment achieved record revenue and pretax margins, driven by increased client engagement, new adviser recruitment, and a growing suite of wealth and lending solutions. The segment’s ongoing adviser recruiting efforts and high retention rates were highlighted as crucial to maintaining momentum.
• Investment Banking Resurgence: The Institutional Group reported its strongest investment banking revenue since 2021, with broad gains across capital raising, advisory, and fixed income underwriting. Management noted renewed activity in financials, technology, and industrials, while healthcare remained a sector with future upside potential.
• Shift to Fee-Based Revenue: Management emphasized a strategic transition over the past decade from transactional to fee-based revenue streams. Fee-related businesses, including asset management and advisory services, now represent 62% of total revenue, up from 26% in 2011, contributing to greater earnings stability.
• Deposit and Balance Sheet Growth: Increased client cash levels and deposit growth—especially from the venture banking team—supported higher net interest income and strengthened the company’s balance sheet. Stifel’s focus on low-risk lending, primarily to high net worth clients, was cited as mitigating credit risk.
• Margin Improvement Initiatives: Operating margin improvements resulted from disciplined expense management and restructuring efforts, particularly within the Institutional Group’s international operations. Management believes further margin expansion is achievable through ongoing cost controls and operational leverage.

Drivers of Future Performance

Stifel’s outlook centers on growth in wealth management, robust investment banking pipelines, and disciplined expense management as key themes for the coming quarters.

• Sustained Wealth Management Momentum: Management expects adviser recruiting and client asset inflows to continue supporting growth in Global Wealth Management. The company’s adviser-centric model, paired with technology investments, is expected to drive both productivity and retention.
• Investment Banking Pipeline Visibility: Stifel’s record investment banking and advisory pipelines provide strong visibility for near-term revenue, particularly if market conditions remain supportive. Management highlighted opportunities in financials and technology, but noted that sectors like healthcare may present additional upside as activity recovers.
• Expense Discipline and Margin Focus: Continued focus on expense management, including potential reductions in compensation and non-compensation expense ratios, is expected to support further margin expansion. Management identified restructuring and operational improvements as levers for enhancing profitability, especially within the Institutional Group.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will closely monitor (1) continued adviser recruitment and client asset inflows in the wealth management segment, (2) conversion of investment banking pipelines into closed deals as market conditions evolve, and (3) the effectiveness of ongoing expense management and operational improvement initiatives. Progress in these areas will be key indicators of Stifel’s ability to sustain profitable growth.

Stifel currently trades at $116.93, up from $112.32 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).

High Quality Stocks for All Market Conditions

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.