Why HFF, Inc. Stock Just Jumped 12%

By Rich Smith Markets Fool.com

What happened

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Dallas-based financial services firm HFF, Inc. (NYSE: HF) is seeing its stock soar in response to earnings released after close of trading Wednesday. HFF shares were up 12% as of 1:10 p.m. EDT on Thursday.

So what

HFF reported 18.1% year-over-year growth in revenue at $138.8 million for its first fiscal quarter. Earnings per share were $0.50, a 39% improvement from last year's Q1.

Both numbers were superior to what Wall Street had predicted. Prior to the earnings report, analysts were expecting HFF to post earnings of only $0.28 per share on revenue of less than $112 million.

Why is HFF stock up? You ask, we explain. Image source: Getty Images.

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Now what

Management said it was "pleased with the Company's first quarter 2017 results," but declined to provide guidance for the rest of the year in its earnings report. So here's what we do know.

Analysts who follow HFF believe that, by year-end, the company will produce $1.90 per share on revenue of $520 million. If they're correct, that would mean a small ($0.09) decline in profits for the year, on revenue roughly flat against 2016 revenue.

HFF, however, just beat Q1 estimates with a stick, earning $0.22 more than Wall Street anticipated. If it can just hold on to those gains and perform as Wall Street expects in quarters two through four, then HFF is positioned to beat estimates for the year as well -- by about $0.13. If and when that happens, expect analyst upgrades to follow, and HFF's stock price to continue to rise.

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Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.