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Value

Tracey Ryniec

Raymond James Financial Inc.

RJF

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Investors are returning to stocks as the world's equity markets continue to rebound from the nasty 2008 stock market downturn. As the financial markets rose, Raymond James Financial Inc. (RJF - Analyst Report) reported its highest amount of Assets Under Administration in its history at $262 billion in the fiscal first quarter.

Raymond James provides financial services, including broker/dealer services, to individuals, corporations and municipalities through its 5300 financial advisors.

Record Revenue in the Fiscal First Quarter

On Jan 19, Raymond James reported its fiscal first quarter of 2011 results and confirmed that business has turned around since the darkest days of the Great Recession.

Revenue rose 18% to $813.8 million compared to last year. The quarter was boosted by the Private Client Group and Raymond James Bank, where loans grew slightly. The Capital Markets group grew revenue by 12% due to strong equity capital markets underwriting and M&A activity.

Assets Under Management reached a record $33.4 billion as the stock markets improved and more money flowed into the company.

The company continues to see a slow and steady improvement in the economy which should give a boost to earnings in the coming quarters.

Earnings per share jumped to 65 cents, beating the Zacks Consensus by 22.6%, or 12 cents. It made just 35 cents in the year ago quarter.

Fiscal 2011 Estimates Rising

Given the big beat in the first quarter, analysts have been raising estimates for the full fiscal year.

4 estimates moved higher since the earnings report came out last week pushing the fiscal 2011 Zacks Consensus Estimate up by 14 cents to $2.43 per share. This is earnings growth of 40.4%.

This is coming on the heels of 34% earnings growth in fiscal 2010.

You can see the nice set up in the Price and Consensus chart over the last few years as estimates have been rising.

Just Barely a Value Stock

Raymond James isn't the cheapest stock out there. But with a forward P/E of 14.8x it does qualify for a "value" stock as I look at stocks under a P/E of 15. Its peer T. Rowe Price (TROW) is even more expensive at 20.6x so comparatively, it is in the "value" camp.

The company trades with a price-to-book of 1.9 which is also below T. Rowe's P/B of 2.3.

Raymond James is a Zacks #1 Rank (strong buy).

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

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