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Raymond James (RJF) Beats Q4 Earnings as Revenues Rise
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Raymond James Financial Inc. (RJF - Free Report) announced fourth-quarter fiscal 2016 (ended Sep 30) adjusted earnings per share of $1.28, which comfortably surpassed the Zacks Consensus Estimate of 98 cents. Also, on a year-over-year basis, the bottom line was up 45%. The prior-year quarter figure did not include any adjustments for non-recurring items.
For fiscal 2016, adjusted earnings came in at $3.84 per share, outpacing the Zacks Consensus Estimate of $3.56. This was also 12% above the year-ago figure of $3.43. The prior-year figure did not include any adjustments for non-recurring items.
Better-than-expected results were primarily driven by an improvement in net revenues. Also, while growth in assets acted as a tailwind, an increase in expenses was the undermining factor.
After taking into consideration acquisition related charges, net income totaled $171.7 million, up 33% from the year-ago quarter. Further, for fiscal 2016, net income totaled $529.4 million, up 5% year over year.
Revenue Growth More Than Offsets Escalated Expenses
Net revenues amounted to $1.46 billion, improving 9% year over year. The rise was attributable to an increase in all the revenue components, partially offset by a hike in interest expense. Further, the reported figure beat the Zacks Consensus Estimate of $1.44 billion.
For fiscal 2016, net revenues grew 4% from the prior year to $5.40 billion. The increase was driven by a rise in all the components except investment banking and other revenues. Moreover, the figure surpassed the Zacks Consensus Estimate of $5.38 billion.
Segment-wise, for the reported quarter, RJ Bank recorded a net revenue increase of 25%. Further, Capital Markets witnessed net revenue growth of 10%, while Asset Management and Private Client Group depicted a top-line improvement of 7%. On the other hand, Others reported a 14% decline in the top line.
Non-interest expenses increased 7% year over year to $1.23 billion. The rise was largely due to other non-interest expenses and clearance and floor brokerage expenses, partially offset by lower bank loan loss provision and business development costs.
As of Sep 30, 2016, client assets under administration grew 26% on a year-over-year basis to $604.4 billion, while financial assets under management rose 18% year over year to $77.0 billion.
Strong Balance Sheet & Ratios
As of Sep 30, 2016, Raymond James reported total assets of $31.6 billion, up 10% sequentially. Further, shareholders’ equity rose 4% on a sequential basis to $4.91 billion.
Book value per share was $34.72, up from $31.68 as of Sep 30, 2015.
As of Sep 30, 2016, total capital ratio came in at 21.5%, down from 23.1% as of Sep 30, 2015. Also, Tier 1 capital ratio was 20.5% compared with 22.1% in the year-ago period.
However, return on equity (on an annualized basis) came in at 14.2% as of Sep 30, 2016, up from 11.5% a year ago.
Our Take
Raymond James remains well positioned to grow via acquisitions, supported by a strong liquidity position. Notably, the acquisition of U.S. Private Client Services unit of Deutsche Asset & Wealth Management is expected to aid the company’s performance. Further, loan growth coupled with improving economic environment will boost its top line growth in the coming quarters. However, elevated expenses, adverse impact of financial reform laws on profitability and increased reliance on U.S. operations remain matters of concern.
The Charles Schwab Corp.’s (SCHW - Free Report) third-quarter 2016 adjusted earnings of 34 cents per share beat the Zacks Consensus Estimate by a penny. Revenue growth, primarily driven by increase in equity market volatility, lower level of fee waivers and stable provisions acted as tailwinds. However, higher expenses remained a concern.
Interactive Brokers Group, Inc. (IBKR - Free Report) reported adjusted earnings per share of 30 cents lagged the Zacks Consensus Estimate by 2 cents. Decline in revenues, increased expenses and dismal performance of the Market Making segment led to the unfavorable result. However, on the upside, the company experienced notable increase in net interest income, gain on currency diversification strategy and growth in customer equity.
TD Ameritrade Holding Corporation (AMTD - Free Report) reported its fiscal 2016 fourth-quarter (ending Sep 30) earnings of 35 cents per share, lagging the Zacks Consensus Estimate of 38 cents. Net revenue was down primarily due to a fall in commissions and transaction fees. Also, higher expenses and continued decline in net interest margin added to the downside.
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Raymond James (RJF) Beats Q4 Earnings as Revenues Rise
Raymond James Financial Inc. (RJF - Free Report) announced fourth-quarter fiscal 2016 (ended Sep 30) adjusted earnings per share of $1.28, which comfortably surpassed the Zacks Consensus Estimate of 98 cents. Also, on a year-over-year basis, the bottom line was up 45%. The prior-year quarter figure did not include any adjustments for non-recurring items.
For fiscal 2016, adjusted earnings came in at $3.84 per share, outpacing the Zacks Consensus Estimate of $3.56. This was also 12% above the year-ago figure of $3.43. The prior-year figure did not include any adjustments for non-recurring items.
Better-than-expected results were primarily driven by an improvement in net revenues. Also, while growth in assets acted as a tailwind, an increase in expenses was the undermining factor.
After taking into consideration acquisition related charges, net income totaled $171.7 million, up 33% from the year-ago quarter. Further, for fiscal 2016, net income totaled $529.4 million, up 5% year over year.
Revenue Growth More Than Offsets Escalated Expenses
Net revenues amounted to $1.46 billion, improving 9% year over year. The rise was attributable to an increase in all the revenue components, partially offset by a hike in interest expense. Further, the reported figure beat the Zacks Consensus Estimate of $1.44 billion.
For fiscal 2016, net revenues grew 4% from the prior year to $5.40 billion. The increase was driven by a rise in all the components except investment banking and other revenues. Moreover, the figure surpassed the Zacks Consensus Estimate of $5.38 billion.
Segment-wise, for the reported quarter, RJ Bank recorded a net revenue increase of 25%. Further, Capital Markets witnessed net revenue growth of 10%, while Asset Management and Private Client Group depicted a top-line improvement of 7%. On the other hand, Others reported a 14% decline in the top line.
Non-interest expenses increased 7% year over year to $1.23 billion. The rise was largely due to other non-interest expenses and clearance and floor brokerage expenses, partially offset by lower bank loan loss provision and business development costs.
As of Sep 30, 2016, client assets under administration grew 26% on a year-over-year basis to $604.4 billion, while financial assets under management rose 18% year over year to $77.0 billion.
Strong Balance Sheet & Ratios
As of Sep 30, 2016, Raymond James reported total assets of $31.6 billion, up 10% sequentially. Further, shareholders’ equity rose 4% on a sequential basis to $4.91 billion.
Book value per share was $34.72, up from $31.68 as of Sep 30, 2015.
As of Sep 30, 2016, total capital ratio came in at 21.5%, down from 23.1% as of Sep 30, 2015. Also, Tier 1 capital ratio was 20.5% compared with 22.1% in the year-ago period.
However, return on equity (on an annualized basis) came in at 14.2% as of Sep 30, 2016, up from 11.5% a year ago.
Our Take
Raymond James remains well positioned to grow via acquisitions, supported by a strong liquidity position. Notably, the acquisition of U.S. Private Client Services unit of Deutsche Asset & Wealth Management is expected to aid the company’s performance. Further, loan growth coupled with improving economic environment will boost its top line growth in the coming quarters. However, elevated expenses, adverse impact of financial reform laws on profitability and increased reliance on U.S. operations remain matters of concern.
RAYMOND JAS FIN Price, Consensus and EPS Surprise
RAYMOND JAS FIN Price, Consensus and EPS Surprise | RAYMOND JAS FIN Quote
Currently, Raymond James holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Performance of Other Investment Brokerage Firms
The Charles Schwab Corp.’s (SCHW - Free Report) third-quarter 2016 adjusted earnings of 34 cents per share beat the Zacks Consensus Estimate by a penny. Revenue growth, primarily driven by increase in equity market volatility, lower level of fee waivers and stable provisions acted as tailwinds. However, higher expenses remained a concern.
Interactive Brokers Group, Inc. (IBKR - Free Report) reported adjusted earnings per share of 30 cents lagged the Zacks Consensus Estimate by 2 cents. Decline in revenues, increased expenses and dismal performance of the Market Making segment led to the unfavorable result. However, on the upside, the company experienced notable increase in net interest income, gain on currency diversification strategy and growth in customer equity.
TD Ameritrade Holding Corporation (AMTD - Free Report) reported its fiscal 2016 fourth-quarter (ending Sep 30) earnings of 35 cents per share, lagging the Zacks Consensus Estimate of 38 cents. Net revenue was down primarily due to a fall in commissions and transaction fees. Also, higher expenses and continued decline in net interest margin added to the downside.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>