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Trading and IB to Support Raymond James' (RJF) Q2 Earnings
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Raymond James (RJF - Free Report) is slated to announce second-quarter fiscal 2021 (ended Mar 31) results on Apr 28, after market close. Its earnings and revenues are expected to have witnessed growth.
In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. The results benefited from robust Capital Markets segment performance and a rise in assets balance. These were partly offset by higher expenses and surge in provisions.
Raymond James has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the positive surprise being 32.60%, on average.
Raymond James Financial, Inc. Price and EPS Surprise
The Zacks Consensus Estimate for earnings of $2.09 per share for the fiscal second quarter has moved 7.2% upward over the past 30 days. Also, the figure indicates a jump of 74.2% from the year-ago reported number. Further, the consensus estimate for sales of $2.23 billion suggests 7.6% rise.
Major Factors at Play
Trading Revenues: A persistent rise in market volatility on account of the $1.9-trillion stimulus package, relatively low coronavirus infection cases, a rise in vaccine coverage, expectations of a faster-than-expected economic rebound and concerns over inflation was witnessed during the quarter. With a spike in volatility and higher client activities, Raymond James’ trading revenues are likely to have witnessed a significant boost in the to-be-reported quarter.
Investment Banking (IB) Fees: Amid near-zero interest rates and the Federal Reserve’s bond purchase program, bond issuance volumes were solid in the quarter as companies took this as an opportunity to bolster their balance sheets. Further, continuing with the momentum, which started in the second half of last year, the IPO market remained active in the to-be-reported quarter. Also, as companies kept building liquidity to tide over the pandemic-induced crisis, there was a rise in follow-up equity issuances.
Thus, growth in Raymond James’ underwriting fees is expected to have been solid in the to-be-reported quarter.
After an impressive June to December 2020 performance, the momentum in the deal making activities continued in the quarter under review on the back of extensive vaccination drives, a brighter macroeconomic outlook and lower rates. During the January-March quarter, though the deal volume didn’t show much improvement, the total value of pending/completed transactions increased drastically.
Further, in light of the pandemic, many companies began business restructuring process with an aim to maintain profitability. Hence, Raymond James’ advisory fees are likely to have been positively impacted.
The consensus estimate of IB fees is pegged at $229 million, suggesting 54.7% growth on a year-over-year basis.
Interest Income: Lending was subdued during the quarter amid gradual resumption of business activities. This, along with low interest rates, might have adversely impacted Raymond James’ interest income growth.
Interest income is largely accounted in the company’s RJ Bank segment. The Zacks Consensus Estimate for the segment’s revenues of $160 million indicates 23.8% decline from the prior year.
Expenses: Raymond James consistently hires advisors and invests in franchises and thus, overall expenses might have risen in the quarter. Also, due to a highly competitive environment, costs are expected to have been elevated.
Management Expectations
Given fewer billable days in second-quarter fiscal 2021, management expects asset management fees in Private Client Group segment to increase about 10% sequentially.
Based on the pipeline and activity levels, the company anticipates second-quarter fiscal 2021 to be healthy for IB business, though not as impressive as the first quarter. Notably, IB revenues are expected to be $160-$165 million.
Given prepayment speeds of higher-yielding securities and mortgages, the company expects Raymond James Bank’s NIM to decline another 10 basis points or so. Nonetheless, growth in the bank's earning assets will likely more than offset NIM contraction, resulting in continued growth of NII.
In the Asset Management segment, results are expected to be positively impacted by higher financial assets under management, provided the equity markets remain resilient.
What the Zacks Model Predicts
Our proven model does not conclusively predict an earnings beat for Raymond James this time around. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Raymond James is 0.00%.
Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).
Stocks Worth a Look
Here are a few finance stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Earnings ESP for Prosperity Bancshares, Inc. (PB - Free Report) is +2.56% and it carries a Zacks Rank #3 at present. The company is slated to report quarterly numbers on Apr 28.
Carlyle Group (CG - Free Report) is slated to report quarterly results on Apr 29. The company currently has an Earnings ESP of +1.46% and a Zacks Rank of 3.
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Trading and IB to Support Raymond James' (RJF) Q2 Earnings
Raymond James (RJF - Free Report) is slated to announce second-quarter fiscal 2021 (ended Mar 31) results on Apr 28, after market close. Its earnings and revenues are expected to have witnessed growth.
In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. The results benefited from robust Capital Markets segment performance and a rise in assets balance. These were partly offset by higher expenses and surge in provisions.
Raymond James has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the positive surprise being 32.60%, on average.
Raymond James Financial, Inc. Price and EPS Surprise
Raymond James Financial, Inc. price-eps-surprise | Raymond James Financial, Inc. Quote
The Zacks Consensus Estimate for earnings of $2.09 per share for the fiscal second quarter has moved 7.2% upward over the past 30 days. Also, the figure indicates a jump of 74.2% from the year-ago reported number. Further, the consensus estimate for sales of $2.23 billion suggests 7.6% rise.
Major Factors at Play
Trading Revenues: A persistent rise in market volatility on account of the $1.9-trillion stimulus package, relatively low coronavirus infection cases, a rise in vaccine coverage, expectations of a faster-than-expected economic rebound and concerns over inflation was witnessed during the quarter. With a spike in volatility and higher client activities, Raymond James’ trading revenues are likely to have witnessed a significant boost in the to-be-reported quarter.
Investment Banking (IB) Fees: Amid near-zero interest rates and the Federal Reserve’s bond purchase program, bond issuance volumes were solid in the quarter as companies took this as an opportunity to bolster their balance sheets. Further, continuing with the momentum, which started in the second half of last year, the IPO market remained active in the to-be-reported quarter. Also, as companies kept building liquidity to tide over the pandemic-induced crisis, there was a rise in follow-up equity issuances.
Thus, growth in Raymond James’ underwriting fees is expected to have been solid in the to-be-reported quarter.
After an impressive June to December 2020 performance, the momentum in the deal making activities continued in the quarter under review on the back of extensive vaccination drives, a brighter macroeconomic outlook and lower rates. During the January-March quarter, though the deal volume didn’t show much improvement, the total value of pending/completed transactions increased drastically.
Further, in light of the pandemic, many companies began business restructuring process with an aim to maintain profitability. Hence, Raymond James’ advisory fees are likely to have been positively impacted.
The consensus estimate of IB fees is pegged at $229 million, suggesting 54.7% growth on a year-over-year basis.
Interest Income: Lending was subdued during the quarter amid gradual resumption of business activities. This, along with low interest rates, might have adversely impacted Raymond James’ interest income growth.
Interest income is largely accounted in the company’s RJ Bank segment. The Zacks Consensus Estimate for the segment’s revenues of $160 million indicates 23.8% decline from the prior year.
Expenses: Raymond James consistently hires advisors and invests in franchises and thus, overall expenses might have risen in the quarter. Also, due to a highly competitive environment, costs are expected to have been elevated.
Management Expectations
Given fewer billable days in second-quarter fiscal 2021, management expects asset management fees in Private Client Group segment to increase about 10% sequentially.
Based on the pipeline and activity levels, the company anticipates second-quarter fiscal 2021 to be healthy for IB business, though not as impressive as the first quarter. Notably, IB revenues are expected to be $160-$165 million.
Given prepayment speeds of higher-yielding securities and mortgages, the company expects Raymond James Bank’s NIM to decline another 10 basis points or so. Nonetheless, growth in the bank's earning assets will likely more than offset NIM contraction, resulting in continued growth of NII.
In the Asset Management segment, results are expected to be positively impacted by higher financial assets under management, provided the equity markets remain resilient.
What the Zacks Model Predicts
Our proven model does not conclusively predict an earnings beat for Raymond James this time around. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Raymond James is 0.00%.
Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).
Stocks Worth a Look
Here are a few finance stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Earnings ESP for Prosperity Bancshares, Inc. (PB - Free Report) is +2.56% and it carries a Zacks Rank #3 at present. The company is slated to report quarterly numbers on Apr 28.
T. Rowe Price Group (TROW - Free Report) is scheduled to release earnings on Apr 29. The company, which carries a Zacks Rank #2 at present, has an Earnings ESP of +0.57%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Carlyle Group (CG - Free Report) is slated to report quarterly results on Apr 29. The company currently has an Earnings ESP of +1.46% and a Zacks Rank of 3.
Time to Invest in Legal Marijuana
If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%
You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.
Today, Download Marijuana Moneymakers FREE >>