Siebert Financial Corp. :SIEB-US: Earnings Analysis: Q3, 2017 By the Numbers : November 21, 2017

Siebert Financial Corp. reports financial results for the quarter ended September 30, 2017.

We analyze the earnings along side the following peers of Siebert Financial Corp. – Oppenheimer Holdings Inc. Class A, Ladenburg Thalmann Financial Services Inc., GAIN Capital Holdings, Inc., E*TRADE Financial Corporation, Stifel Financial Corp., Raymond James Financial, Inc., TD Ameritrade Holding Corporation and LPL Financial Holdings Inc. (OPY-US, LTS-US, GCAP-US, ETFC-US, SF-US, RJF-US, AMTD-US and LPLA-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 3.09 million, Net Earnings of USD 1.00 million.
  • Gross margins widened from 90.87% to 91.84% compared to the same period last year, operating (EBITDA) margins now 33.02% from -48.18%.
  • Year-on-year change in operating cash flow of 205.52% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-09-30 2017-06-30 2017-03-31 2016-12-31 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 3.09 2.69 2.38 2.63 2.22
Revenue Growth (%YOY) 38.96 9.22 -4.76 -7.17 -12.34
Earnings (mil) 1 0.37 0.06 -3.21 -1.14
Earnings Growth (%YOY) 187.81 150.14 111.58 -19956.25 -60.79
Net Margin (%) 32.41 13.57 2.44 -122.06 -51.28
EPS 0.05 0.02 0 -0.15 -0.05
Return on Equity (%) 25.15 11.07 2.16 -41.23 -8.21
Return on Assets (%) 91.17 40.52 6.43 -138.17 -29.87

Access our Ratings and Scores for Siebert Financial Corp.

Market Share Versus Profits

Revenues History
Earnings History

SIEB-US’s change in revenue this period compared to the same period last year of 38.96% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that SIEB-US is holding onto its market share. Also, for comparison purposes, revenues changed by 14.88% and earnings by 174.25% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth was influenced by year-on-year improvement in gross margins from 90.87% to 91.84% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from -48.18% to 33.02% compared to the same period last year. For comparison, gross margins were 88.69% and EBITDA margins were 18.59% in the last reporting period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

SIEB-US’s change in operating cash flow of 205.52% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from -51.28% to 32.41% and (2) one-time items. The company’s pretax margins are now 32.41% compared to -51.28% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Siebert Financial Corp.

Company Profile

Siebert Financial Corp. operates as a bank holding company. The company operates through its subsidiary, Muriel Siebert & Co., Inc., conducts retail discount brokerage and investment banking business. Its offerings include trading, fund exchange, competitive money funds, active traders, dynamic monitor, extended hours trading, research choices, news and account alerts, online bill payment, planning & education, wireless, touchtone and newsletter. Siebert Financial has two divisions: Retail and Capital Markets Group. The Retail division includes discount brokerage and related services, independent retail execution services, retail customer service, retirement accounts, customer financing and information and communications systems. The Capital Markets Group division serves as a co-manager, underwriting syndicate member and selling group member on a wide spectrum of securities offerings for corporations and Federal agencies. This Division also provides investment banking and institutional equity execution services. The company was founded on April 24, 1996 and is headquartered in New York, NY.

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