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Raymond James Financial, Inc. (RJF) Up 6.6% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Raymond James Financial, Inc. (RJF - Free Report) . Shares have added about 6.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Raymond James Financial, Inc. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Raymond James Q3 Earnings Beat, Revenues & Costs Up Y/Y

Raymond James’ third-quarter fiscal 2021 (ended Jun 30) adjusted earnings of $2.74 per share easily surpassed the Zacks Consensus Estimate of $2.32. The bottom line was up 77% from the prior-year quarter.

Results benefited from impressive Capital Markets and Asset Management segments performance, which majorly drove revenue growth. Rise in assets balance, provision benefit and strong balance sheet position were the other tailwinds. However, higher operating expenses posed an undermining factor.

Net income (GAAP basis) was $307 million, jumping 78% from the prior-year quarter.

Revenues & Costs Rise

Net revenues were $2.47 billion, increasing 35% year over year. The rise was driven by all revenue components except interest income. The top line also beat the Zacks Consensus Estimate of $2.38 billion.

Segment wise in the reported quarter, RJ Bank registered a decline of 5% from the prior year in net revenues. Nonetheless, Private Client Group and Asset Management recorded 36% and 38% growth in revenues, respectively. Capital Markets’ top line surged 38% from the year-ago quarter. Others also recorded solid revenues of $2 million against negative revenues of $20 million in the prior-year quarter.

Non-interest expenses soared 28% to $2.09 billion. The increase was mainly due to higher compensation, commissions and benefits, and business development charges and investment sub-advisory fees, which were partly offset by provision benefit.

As of Jun 30, 2021, client assets under administration were $1.17 trillion, up 39% from the end of the prior-year quarter. Financial assets under management were $191 billion, up 31%.

Strong Balance Sheet & Capital Ratios

As of Jun 30, 2021, Raymond James reported total assets of $57.2 billion, up 2% sequentially. Total equity increased 4% from the fiscal second quarter to $7.9 billion.

Book value per share was $57.44, up from $50.84 as of Jun 30, 2020.

As of Jun 30, 2021, total capital ratio was 25.5% compared with 26.0% as of the Jun 30, 2020. Tier 1 capital ratio was 24.3% compared with 24.8% as of June 2020-end.

Return on equity (annualized basis) was 15.9% at the end of the reported quarter compared with 10.0% in the prior-year period.

Share Repurchase Update

In the reported quarter, Raymond James repurchased approximately 0.4 million shares for $48 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Raymond James Financial, Inc. has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Raymond James Financial, Inc. has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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