This investment bank just came off a huge quarter, with revenues of $200.2 million compared with $128.1 million for the prior year quarter. Adjusted EPS was $0.71, compared with $0.28, last year.
PJT Partners Inc. (PJT)
From Validea Hot List Newsletter
PJT Partners Inc. is an advisory-focused investment bank. The company offers an array of strategic advisory, restructuring, and special situations and private fund advisory and placement services to corporations, financial sponsors, institutional investors, and governments. It provides, through Park Hill Group, private fund advisory and placement services for alternative investment managers, including private equity funds, real estate funds and hedge funds. Its advisory business offers a range of financial advisory and transaction execution capability, including mergers and acquisitions, joint ventures, minority investments, asset swaps, divestitures, takeover defenses, corporate finance advisory, private placements, and distressed sales. Its Restructuring and Special Situations Group’s services include advising companies, creditors and financial sponsors on recapitalizations, reorganizations, exchange offers, debt repurchases, capital raises, and distressed mergers and acquisitions.
P/E/Growth: Peter Lynch Strategy
P/E/GROWTH RATIO: PASS
The investor should examine the P/E (29.18) relative to the growth rate (48.28%), based on the average of the 4 and 5 year historical eps growth rates, for a company. This is a quick way of determining the fairness of the price. In this particular case, the P/E/G ratio for PJT (0.60) makes it favorable.
EPS GROWTH RATE: PASS
This methodology favors companies that have several years of fast earnings growth, as these companies have a proven formula for growth that in many cases can continue many more years. This methodology likes to see earnings growth in the range of 20% to 50%, as earnings growth over 50% may be unsustainable. The EPS growth rate for PJT is 48.3%, based on the average of the 4 and 5 year historical eps growth rates, which is considered ‘OK’. However, it may be difficult to sustain such a high growth rate.
EQUITY/ASSETS RATIO: PASS
This methodology uses the Equity/Assets Ratio as a way to determine a financial intermediary’s health, as it is a better measure than the Debt/Equity Ratio. PJT’s Equity/Assets ratio (9.00%) is healthy and above the minimum 5% this methodology looks for, thus passing the criterion.
RETURN ON ASSETS: PASS
This methodology uses Return on Assets as a way to measure a financial intermediary’s profitability. PJT’s ROA (11.53%) is above the minimum 1% that this methodology looks for, thus passing the criterion.
John Reese, Validea Hot List Newsletter, validea.com, 877-439-0506, May 29, 2020