Dj Dir Whitney Sells 1725 Of Pjt Partners Inc >Pjt

Financial stocks are basking in a post-election rally after Donald Trump's election win as investors anticipate a friendlier regulatory landscape for banks, brokers and consumer finance companies.

With expectations of deregulation and possible tax cuts, traders are piling into financials at levels not seen in years.

The Financials Select Sector SPDR Fund jumped over 5% last week, hitting fresh record highs, while weekly inflows surged to $1.573 billion—the highest in over two years.

Regional banks, in particular, were on fire, with the SPDR S&P Regional Banking ETF skyrocketing nearly 11% and seeing $1.09 billion in inflows, marking its largest influx of money since March 2023.

Key Drivers: Deregulation, Tax Cuts Fuel Investor Optimism

Investors are betting on a wave of Trump-favored financial reforms that could benefit the sector.

Richard Ramsden, a Goldman Sachs analyst, highlighted that "the market is pricing in the potential for changes to a number of proposed regulations, a step up in capital markets activity, as well as the potential for a reduction in the corporate tax rate."

Potential regulatory changes under Trump could include:

• 401K Reform: Opening up retirement plans to private investments could attract a flood of new capital.
• Relaxed Antitrust Regulations: A more lenient antitrust stance may spark increased mergers and acquisitions (M&A) activity.
• Reduced SEC Oversight: There is limited clarity on whether the SEC will continue probing brokers' sweep pricing practices.
• Crypto-Friendly Policies: Financial firms with crypto exposure may benefit from a more favorable regulatory environment and higher digital asset prices.

Goldman Sachs's Top Picks Among Financials Stocks

In anticipation of these shifts, Ramsden and his team have identified several top picks across the financial sector.

Here's where they see the biggest potential gains:

• Large Banks: Citigroup Inc. , JPMorgan Chase & Co. , and Wells Fargo & Co. .
• Consumer Finance: Bread Financial Holdings , Synchrony Financial , and Capital One Financial Corp. .
• Capital Markets: Blackstone Inc. , Apollo Global Management Inc. , KKR & Co. Inc. , LPL Financial Holdings , Tradeweb Markets Inc. , Evercore Inc. , and PJT Partners Inc. .

Steeper Yield Curve Expected to Boost Regional Banks

As markets react to potential economic stimulus and reduced regulatory pressure, analysts anticipate a steeper yield curve, which could be a windfall for banks with heavy exposure to fixed-rate assets.

Around 60% of both regional and large banks' balance sheets consist of fixed-rate holdings, positioning them to profit as long-term rates rise.

Ramsden's picks for banks that stand to gain the most from a steeper yield curve include:

Regional Banks:

• Citizens Financial Group Inc.
• Comerica Inc.
• First Hawaiian Inc.
• Zions Bancorporation
• Truist Financial Corp.
• Huntington Bancshares Inc.
• Regions Financial Corp.
• PNC Financial Services Group Inc.
• Ally Financial Inc. .

Surge in Capital Velocity: M&A and Trading Boost Expected

Trump's pro-business stance is also expected to accelerate capital velocity in the M&A and equity capital markets, providing a strong backdrop for trading activity.

According to Ramsden, large banks like Morgan Stanley could be the biggest beneficiaries, while among regional banks, KeyCorp and Citizens Financial Group Inc. stand out.

Investment banks could also see a boost, with Jefferies Financial Group Inc. , Moelis & Co. , PJT Partners Inc. , and Piper Sandler Companies positioned to capitalize on a more active M&A market.

In the alternative asset management space, Carlyle Group Inc. , KKR, Apollo, TPG Inc. , and Ares Management Corp. are expected to benefit from an uptick in private equity deal flow.

Tax Cut Hopes Could Supercharge Regional Banks

Financial stocks are uniquely positioned to benefit from any corporate tax reductions, given that 90% of their earnings come from the U.S. and are currently taxed at an average rate of 23%. After the 2017 tax reform slashed the corporate tax rate from 35% to 21%, financials saw their effective tax rate drop by 10 percentage points.

Ramsden estimates that if the Trump administration pursues another tax cut, regional banks would likely see the most significant upside.

His top tax-cut beneficiaries include Moelis & Co. , American Express Co. , Evercore Inc., Bread Financial Holdings, Piper Sandler, First Citizens BancShares Inc. , Synovus Financial Corp. , and Western Alliance Bancorporation .

Insurers to Benefit from Steeper Curve, P&C Pricing Power

The insurance sector may also stand to gain under Trump's pro-business policies. Ramsden expects potential increases in claim costs but sees positive momentum for property and casualty pricing.

Insurers with substantial U.S. exposure and a favorable position on the yield curve could see tailwinds.

Ramsden's picks in the insurance space include W.R. Berkley Corp. , Hartford Financial Services Group Inc. , and The Travelers Companies Inc. , which he believes are better positioned than brokers to benefit from these trends.

Read Next:

• EXCLUSIVE: Trump Victory Triggers ‘Reshoring’ Rally As Supply Chain Security Outweighs Cost

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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Have you been paying attention to shares of PJT Partners (PJT)? Shares have been on the move with the stock up 15.4% over the past month. The stock hit a new 52-week high of $163.54 in the previous session. PJT Partners has gained 60.5% since the start of the year compared to the 24.1% move for the Zacks Finance sector and the 17.7% return for the Zacks Financial - Miscellaneous Services industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 29, 2024, PJT Partners reported EPS of $0.93 versus consensus estimate of $0.74.

For the current fiscal year, PJT Partners is expected to post earnings of $4.40 per share on $1.42 billion in revenues. This represents a 34.56% change in EPS on a 23.22% change in revenues. For the next fiscal year, the company is expected to earn $5.40 per share on $1.62 billion in revenues. This represents a year-over-year change of 22.73% and 13.65%, respectively.

Valuation Metrics

PJT Partners may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

PJT Partners has a Value Score of C. The stock's Growth and Momentum Scores are B and F, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 37.2X current fiscal year EPS estimates, which is a premium to the peer industry average of 13.1X. On a trailing cash flow basis, the stock currently trades at 22.9X versus its peer group's average of 9.5X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, PJT Partners currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if PJT Partners passes the test. Thus, it seems as though PJT Partners shares could still be poised for more gains ahead.

How Does PJT Stack Up to the Competition?

Shares of PJT have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is WisdomTree, Inc. (WT). WT has a Zacks Rank of # 2 (Buy) and a Value Score of C, a Growth Score of B, and a Momentum Score of B.

Earnings were strong last quarter. WisdomTree, Inc. beat our consensus estimate by 5.88%, and for the current fiscal year, WT is expected to post earnings of $0.74 per share on revenue of $429.19 million.

Shares of WisdomTree, Inc. have gained 10.1% over the past month, and currently trade at a forward P/E of 16.73X and a P/CF of 21.79X.

The Financial - Miscellaneous Services industry is in the top 31% of all the industries we have in our universe, so it looks like there are some nice tailwinds for PJT and WT, even beyond their own solid fundamental situation.

Zacks Investment Research

Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market's attention and produce exceptional returns. But finding a great growth stock is not easy at all.

That's because, these stocks usually carry above-average risk and volatility. In fact, betting on a stock for which the growth story is actually over or nearing its end could lead to significant loss.

However, it's pretty easy to find cutting-edge growth stocks with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects.

Our proprietary system currently recommends PJT Partners (PJT) as one such stock. This company not only has a favorable Growth Score, but also carries a top Zacks Rank.

Research shows that stocks carrying the best growth features consistently beat the market. And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Here are three of the most important factors that make the stock of this investment bank a great growth pick right now.

Earnings Growth

Earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. And for growth investors, double-digit earnings growth is definitely preferable, and often an indication of strong prospects (and stock price gains) for the company under consideration.

While the historical EPS growth rate for PJT Partners is 4.7%, investors should actually focus on the projected growth. The company's EPS is expected to grow 34.6% this year, crushing the industry average, which calls for EPS growth of 15.3%.

Cash Flow Growth

Cash is the lifeblood of any business, but higher-than-average cash flow growth is more beneficial and important for growth-oriented companies than for mature companies. That's because, high cash accumulation enables these companies to undertake new projects without raising expensive outside funds.

Right now, year-over-year cash flow growth for PJT Partners is 38.1%, which is higher than many of its peers. In fact, the rate compares to the industry average of -22%.

While investors should actually consider the current cash flow growth, it's worth taking a look at the historical rate too for putting the current reading into proper perspective. The company's annualized cash flow growth rate has been 14.9% over the past 3-5 years versus the industry average of 10.7%.

Promising Earnings Estimate Revisions

Superiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

The current-year earnings estimates for PJT Partners have been revising upward. The Zacks Consensus Estimate for the current year has surged 1.1% over the past month.

Bottom Line

While the overall earnings estimate revisions have made PJT Partners a Zacks Rank #2 stock, it has earned itself a Growth Score of A based on a number of factors, including the ones discussed above.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

This combination positions PJT Partners well for outperformance, so growth investors may want to bet on it.

Zacks Investment Research

PJT Partners (PJT) came out with quarterly earnings of $0.93 per share, beating the Zacks Consensus Estimate of $0.74 per share. This compares to earnings of $0.78 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 25.68%. A quarter ago, it was expected that this investment bank would post earnings of $0.82 per share when it actually produced earnings of $1.19, delivering a surprise of 45.12%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

PJT Partners, which belongs to the Zacks Financial - Miscellaneous Services industry, posted revenues of $326.32 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 14.10%. This compares to year-ago revenues of $278.36 million. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

PJT Partners shares have added about 38.5% since the beginning of the year versus the S&P 500's gain of 22.1%.

What's Next for PJT Partners?

While PJT Partners has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for PJT Partners: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $1.43 on $412 million in revenues for the coming quarter and $4.35 on $1.39 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Financial - Miscellaneous Services is currently in the bottom 43% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Axos Financial (AX), another stock in the same industry, has yet to report results for the quarter ended September 2024. The results are expected to be released on October 30.

This bank holding company is expected to post quarterly earnings of $1.80 per share in its upcoming report, which represents a year-over-year change of +27.7%. The consensus EPS estimate for the quarter has been revised 0.4% lower over the last 30 days to the current level.

Axos Financial's revenues are expected to be $299.59 million, up 22% from the year-ago quarter.

Zacks Investment Research