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Why Piper Jaffray Shares Popped

By Sean Williams - Oct 17, 2012 at 12:58PM

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Is this meaningful or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of investment brokerage Piper Jaffray (PIPR 0.66%) jumped as much as 11% earlier in the trading session following the release of its third-quarter earnings results.

So what: To say that Piper Jaffray absolutely killed analysts estimates this quarter would still be doing the company an injustice. For the quarter, Piper Jaffray reported $1.11 in EPS considering both continuing and discontinued operations, with net revenue of $133 million. The consensus estimates from Wall Street had called for a mere $0.31 profit on $105.6 million in net revenue. Leading the beat-down on analyst's results was a huge rise in equity financing and fixed-income business, as well as a modest rise in its global asset management services. Piper Jaffray also announced it was exiting the Hong Kong capital markets business during the recently ended quarter.

Now what: Did I mention that it absolutely obliterated analyst estimates? OK, so this probably won't be the norm; growth should normalize, especially next year when its discontinued operations aren't factored into its bottom line. Still, assets under management have been on the rise, and a resurgence in equity financing deals have spurred growth in the past two quarters. If Piper Jaffray can keep these two operations moving higher, I could easily see the company's share price moving even higher as well.

Craving more input? Start by adding Piper Jaffray to your free and personalized watchlist so you can keep up on the latest news with the company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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