Back to top

Analyst Blog

Raymond James Financial Inc.'s (RJF - Analyst Report) fiscal second-quarter 2013 (ended Mar 31) earnings per share came in at 68 cents, missing the Zacks Consensus Estimate of 75 cents. However, this compares favorably with the year-ago earnings of 64 cents.

Results were adversely affected by increased expenses, partially offset by top-line improvement. Growth in assets under management (AUM) and assets under administration were also among the positives.

GAAP net income for the reported quarter came in at $80.0 million or 56 cents per share, compared with $68.8 million or 52 cents per share in the prior-year quarter.

Behind the Headlines

Raymond James’ total revenue for the quarter came in at $1,170.1 million, surging 31.5% year over year. The elevation was largely driven by improvement in securities commissions and fees, investment advisory fees, interest income, account and service fees as well as other revenues, partially offset by a decline in investment banking and net trading profits. This surpassed the Zacks Consensus Estimate of $1,119.0 million by 4.6%.

Non-interest expenses increased 28.8% from the prior-year quarter to $983.8 million. The hike was primarily attributable to elevated compensation and benefits expenses, communications and information processing, occupancy and equipment costs, clearance and floor brokerage costs as well as business development expenses, acquisition related expenses along with investment sub-advisory fees and other expenses. Higher expenses were mitigated by lower bank loan loss provision.

As of Mar 31, 2013, assets under administration rose 39.0% year over year to $407.0 billion. Similarly, AUM totaled $51.0 billion, increasing 30.0% from the year-ago quarter.

Balance Sheet

As of Mar 31, 2013, Raymond James reported total assets of $22.7 billion, up 17.6% year over year. Shareholders’ equity came in at $3.5 billion, increasing 12.4% from $3.1 billion in the prior-year quarter. Book value per share at the end of the quarter was $25.14 compared with $22.84 at the end of the year-ago quarter.

Quarterly Results of Other Asset Managers

The Charles Schwab Corporation’s (SCHW - Analyst Report) first-quarter 2013 earnings marginally missed the Zacks Consensus Estimate by a penny. Lower-than-expected results were attributable to higher operating expenses and a rise in provision for loan losses, partially offset by top-line growth.

TD Ameritrade Holding Corporation’s (AMTD - Analyst Report) fiscal second-quarter 2013 (ended Mar 31, 2013) earnings marginally beat the Zacks Consensus Estimate. Better-than-expected results reflected a rise in revenues and decline in operating expenses.

However, Interactive Brokers Group, Inc.’s (IBKR - Analyst Report) first-quarter 2013 earnings missed the Zacks Consensus Estimate. The results lagged marginally owing to a fall in top line, partially offset by a decline in operating expenses.

Our Take

Raymond James’ strong balance sheet and its efforts to boost revenue by recruiting experienced advisors are expected to be accretive to its financials going forward. Alongside, the company’s strong capital position and capital deployment activities should make its stock attractive for yield-seeking investors.

On the other hand, regulatory issues, a low interest-rate environment, sluggish economic growth and continuously rising expenses are expected to hamper its top-line improvement.

Currently, Raymond James carries a Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
QIHOO 360 T… QIHU 95.02 +4.92%
E COMMERCE… DANG 13.22 +4.18%
CLAYTON WIL… CWEI 139.25 +3.76%
PILGRIM'S P… PPC 31.30 +2.99%
ACTELION LT… ALIOF 124.80 +2.97%