PIPER SANDLER COMPANIES (PIPR) stock intrinsic value fair value estimate & owner earnings analysis

Piper Sandler Companies is a U.S. investment bank. It advises companies and private-equity sponsors on mergers, acquisitions, restructurings and private capital raising; underwrites stock and bond offerings; raises money for states, cities, school districts and hospitals (public finance); and runs institutional sales, trading and research in equities and fixed income. Its two longest-standing franchises are advisory work for banks and other financial institutions, built around the January 2020 acquisition of Sandler O'Neill, and public finance, where it ranked second nationally in K-12 education financing in 2025 and its special-districts team holds about half the market in the states where it competes. The firm keeps adding small teams: Aviditi Advisors (private capital advisory, August 2024) and G Squared (government services and defense technology banking, September 2025) are the latest in a run of small bolt-on purchases. Important note on share count: Piper Sandler split its stock four-for-one in March 2026. Every figure below is per current (post-split) share. Our previous estimates of $100, $231 and $316 were expressed per pre-split share; on today's share count they equal about $25, $58 and $79. How we measure earnings. We use owner earnings: operating cash flow with the large year-to-year swings in trading inventory, receivables and bonus accruals stripped out, less stock compensation and the capital spending needed to stand still. Three judgements matter. First, the firm consolidates some merchant-banking funds that belong mostly to outside investors; their share of the funds' results (for example about $52 million in 2021) is removed, because it never belongs to Piper Sandler shareholders. Second, Piper Sandler recruits bankers with forgivable loans that are written off over several years; the cash for those loans is paid out up front and would otherwise vanish from the cash-flow figures, so we charge the yearly write-off ($25 million in 2025) as the real pay cost it is. Third, amortization of acquired customer relationships (about $10 million in 2025) is added back as a sunk purchase cost; it is small here. On this basis owner earnings per share were $0.80 (2020), $3.79 (2021), $1.15 (2022), $1.80 (2023), $3.00 (2024) and $4.00 (2025). This is a deeply cyclical business: deal and underwriting volumes swung owner earnings more than fourfold between 2021 and 2022. We therefore use the six years since the Sandler O'Neill merger, which cover a boom (2021), a bust (2022-2023) and a recovery (2024-2025), and take the middle of that range, about $2.40 per share, as normal earning power. Owner earnings grew 33% in 2025 (from $3.00 to $4.00), but that is a cyclical upswing, not a new baseline; the base case starts from the full-cycle normal and assumes only 2% growth in year one, well below the trailing rate. First-half 2026 net income of $133 million, up from $107 million a year earlier, supports continued strength but is not enough to lift the normal level. (Operating cash flow was negative $255 million in the first half, as it is every year when annual bonuses are paid; it does not signal trouble.) Debt. As a broker-dealer that finances trading inventory as part of its daily business, Piper Sandler's borrowing is part of its operations, so we value its earnings after interest and do not subtract borrowings separately. There is little to subtract anyway: the firm retired its last senior notes in 2023, has no long-term debt, and had only $15 million of short-term borrowings at June 30, 2026 (about $0.21 per share). Interest costs are trivial against earnings in every case below, so there is no refinancing risk to carry. Bear case, about $28 per share: the 2022-2023 slump in advisory and underwriting returns. Owner earnings sit at the 2022 trough level of $1.15 per share for three years, then settle at the 2023 level of $1.80 and never grow again. The named risks are the firm's dependence on deal volume and on bank-sector mergers, which dried up in 2022-2023, and the fact that the business is its bankers - a talent business with high compensation. The franchise persists (the firm has operated since 1895), but earns only trough-to-middling returns. The business is worth about $2.0 billion, owes essentially nothing beyond $15 million of short-term funding, and shareholders keep about $28 per share. Base case, about $47 per share: earnings run at the $2.40 full-cycle normal and grow 2% a year for ten years, to about $2.93, and then hold flat. The only growth credited is the continuation of the firm's repeatable program of hiring senior bankers and buying small advisory boutiques funded from its own resources (DBO Partners in 2022, Aviditi in 2024 and G Squared in 2025, among others), at a rate below the firm's long-run record, since the big step-up in size came from the Sandler O'Neill deal, which was a one-off bet. Beyond year ten we assume the public-finance and financial-institutions franchises, both decades old, keep producing that level of earnings without further growth. The business is worth about $3.3 billion with essentially no debt against it: about $47 per share. Bull case, about $68 per share: the business keeps running near its 2024 level of $3.00 per share (a level it has already achieved and exceeded in 2025) and the hiring-and-acquisition program compounds at 4% a year for ten years, to about $4.44, then holds flat. No market-wide boom is assumed. The business is worth about $4.9 billion with essentially no debt: about $68 per share. What changed since our prior estimate, on today's share count: the base case falls from about $58 to $47 and the bull case from about $79 to $68, mainly because we now remove the outside investors' share of the consolidated funds' profits (large in 2021), charge the cost of recruiting loans, and credit slower growth (2% rather than 4% in the base case) because only the small, self-funded bolt-on program counts as repeatable. The bear case rises from about $25 to $28 because it is now built explicitly from the 2022 and 2023 results rather than a single low figure. Margin-of-safety price. Because a downturn can cut a year's earnings by three-quarters, the estimate calls for a wide cushion: about 40% below the base value, which is roughly the bear-case value. The margin-of-safety price of about $28 sits at the bear-case value if the 2022-2023 slump became the norm, and from that price the base case implies a high return if the business simply earns its normal level. What would make this wrong: a long drought in bank mergers or municipal bond issuance, the loss of key banking teams, or a return to the large acquisition-related stock grants that weighed on 2020-2022. On the other side, if the 2024-2025 earnings level proves to be the new normal across a full downturn, the base case is too low. Nothing material in the filings could not be reconciled; a small (under 4%) gap in the 2019 cash-flow reconciliation relates to the sale of a former asset-management affiliate and does not affect the valuation.