Critical Comparison: Greenhill & Co. (GHL) and Stifel (SF)

Greenhill & Co. (NYSE: GHL) and Stifel (NYSE:SF) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, analyst recommendations, institutional ownership, dividends, valuation and profitability.

Volatility & Risk

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Greenhill & Co. has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500. Comparatively, Stifel has a beta of 1.72, meaning that its share price is 72% more volatile than the S&P 500.

Insider and Institutional Ownership

98.8% of Greenhill & Co. shares are held by institutional investors. Comparatively, 86.2% of Stifel shares are held by institutional investors. 8.3% of Greenhill & Co. shares are held by insiders. Comparatively, 3.6% of Stifel shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Greenhill & Co. pays an annual dividend of $0.20 per share and has a dividend yield of 1.0%. Stifel pays an annual dividend of $0.48 per share and has a dividend yield of 0.8%. Greenhill & Co. pays out -71.4% of its earnings in the form of a dividend. Stifel pays out 12.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Greenhill & Co. is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Greenhill & Co. and Stifel’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Greenhill & Co. -11.14% -3.43% -1.96%
Stifel 6.25% 12.04% 1.62%

Analyst Recommendations

This is a summary of current recommendations for Greenhill & Co. and Stifel, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Greenhill & Co. 3 3 0 0 1.50
Stifel 0 1 4 0 2.80

Greenhill & Co. presently has a consensus price target of $14.83, indicating a potential downside of 24.59%. Stifel has a consensus price target of $70.00, indicating a potential upside of 20.84%. Given Stifel’s stronger consensus rating and higher probable upside, analysts clearly believe Stifel is more favorable than Greenhill & Co..

Valuation and Earnings

This table compares Greenhill & Co. and Stifel’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Greenhill & Co. $239.18 million 2.25 -$26.65 million ($0.28) -70.25
Stifel $2.93 billion 1.42 $182.87 million $3.99 14.52

Stifel has higher revenue and earnings than Greenhill & Co.. Greenhill & Co. is trading at a lower price-to-earnings ratio than Stifel, indicating that it is currently the more affordable of the two stocks.

Summary

Stifel beats Greenhill & Co. on 11 of the 16 factors compared between the two stocks.

Greenhill & Co. Company Profile

Greenhill & Co., Inc., together with its subsidiaries, operates as an independent investment bank for corporations, partnerships, institutions, and governments worldwide. The company provides financial advisory services primarily related to mergers and acquisitions, restructurings, financings, and capital raisings. It is also involved in the provision of advisory services to clients in relation to divestitures, spin-offs, and other strategic transactions, as well as various stages of these transactions ranging from initial structuring to final execution. In addition, the company advises clients on strategic matters, such as activist response, defensive tactics, special committee projects, licensing deals, joint ventures, valuation, negotiation tactics, industry dynamics, structuring alternatives, and timing and pricing of transactions, as well as financing alternatives. Further, it advises debtors, creditors, governments, pension funds, and other stakeholders in companies experiencing financial distress, as well as potential acquirers of distressed companies and assets. Additionally, the company assists the clients in identifying and capitalizing on potential incremental sources of value, as well as who seek court-assisted reorganizations by developing and seeking approval for plans of reorganization. It advises on capital structures and sales or recapitalizations; other financing matters, including debt issuances, equity financings, and exchange offers; and initial public offerings and other equity capital market transactions. The company also assists general partners and sponsors in raising capital for new private funds; and provides related advisory services to pension funds, sovereign wealth funds, endowments, and other institutional investors, as well as on primary and secondary market transactions, and real estate funds. Greenhill & Co., Inc. was founded in 1996 and is headquartered in New York, New York.

Stifel Company Profile

Stifel Financial Corp., a financial services and bank holding company, provides retail and institutional wealth management, and investment banking services to individual investors, corporations, municipalities, and institutions in the United States, the United Kingdom, and rest of Europe. The company operates through three segments: Global Wealth Management, Institutional Group, and Other. It provides private client services, including securities transaction and financial planning services; institutional equity and fixed income sales, trading and research, and municipal finance; investment banking services, such as mergers and acquisitions, public offerings, and private placements; and retail and commercial banking comprising personal and commercial lending programs. The company also acts as an underwriter or selling group member in equity and fixed income product offerings. Stifel Financial Corp. was founded in 1890 and is headquartered in St. Louis, Missouri.

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