The Company provides a range of critical securities and futures processing infrastructure products and services to the global securities and investment industry.
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Penson is dirt cheap right now, since it has been taking a beating from the other firms in the financial industry it is just too over sold. At this price it is more than worth holding for the long-term.
I want to add this here because I can not on the Artilce that quoted the above statement but I feel was an inaccurate analysis because it was comparing Brokerage Investment companies to Penson who has a very different business model.Well I would not consider MER or GS as Penson's 'peers' when assesing business performance either current and forward looking. This is based on the following assumptions differences in their respective business models. When looking at how MER and GS they fall more under the lines of Investment brokerage whereas Penson would be considered along the lines of Asset Management, P/E avg for AM is 20.44. This is based on how I perceive that each of the firms earn most of their revenues and also that GS and MER have more risk exposure due the nature of their various business units but specifically the investment banking arms, retail trading, bond trading, etc. It would seem to me that where Penson gets most of its revenue is only a small fraction of where the other companies derive their revenue from. Though I am not sure if Penson has a retail or bond trading desk but if you read their SEC reports or the last couple of conference calls with the analysts it does not seem that they derive that much of their revenue from or have much risk exposure to that type of business.What I do notice from the conference calls is Penson looks to be positioned very well so that once the Fed stablizes the rates and then the rates begin to rise Penson should be blowing it out of water. It appears Penson took a major hit when they missed earnings but since they were a new IPO the shorts dumped it on them and they took a beating pretty badly but I suspect this was a one time occurence because they have made earnings or beat them every quarter since. They even did this with all of the downside pressure from interest rates while also continuing to grow their business. So if you take into consideration the average P/E for Asset Management which is 20.44 or even say that Penson should be 10% lower than the average then Penson should be trading at a P/E of 18.34. Since this article was posted their price has risen but they are still trading at 12.15. To me they are still trading at a discount and when the rates begin to rise again or at least hold steady their revenue should sky rocket because they will have the business in house but the spread will only get better without adding any overhead expenses to reduce revenue. Essentially it will all go to the bottom line which will drastically increase earning thus lowering the P/E further which should cause the price to rise. Also on the last conference call it seems that they are growing other lines of business currently in house which could possible have a greater impact on revenues. I really like how I see this firm responding to the current market pressures by continuing to make earnings while also continuing to expand their customer base.