Raymond James (RJF Quick QuoteRJF - Free Report) is slated to announce fourth-quarter and fiscal 2021 (ended Sep 30) results on Oct 27, after market close. Its earnings and revenues are expected to have witnessed growth in the to-be-reported quarter on a year-over-year basis.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from robust Capital Markets and Asset Management segments performance, provision benefits, and a rise in assets balance. These were partly offset by higher expenses.

Raymond James has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the surprise being 25%, on average.

The Zacks Consensus Estimate for the company’s fiscal fourth-quarter earnings is pegged at $1.75 per share, which has been unchanged over the past seven days. The figure indicates a rise of 47.1% from the year-ago quarter’s reported number. The consensus estimate for sales of $2.51 billion suggests 21% year-over-year growth.

Factors to Note for Q4

Trading Revenues: Unlike the prior quarters, wherein significant market volatility and client activity supported trading revenues; market normalization and relatively reduced volatility are expected to have dampened overall trading business this time around. Thus, Raymond James’ trading revenues are likely to have been subdued in the to-be-reported quarter.

Investment Banking (IB) Fees: Continued momentum in the IPO market and a steady rise in follow-up equity issuances were witnessed in the to-be-reported quarter. Also, bond issuance volumes remained decent. Thus, Raymond James’ underwriting fees are expected to have been positively impacted in the quarter.

Like the last few quarters, the September-end quarter continued to witness a rapid pace of deal-making across the globe. This was largely driven by the resumption of normal business activities, excess cash levels, companies’ appetite for strengthening scale and market share, and solid economic recovery. Both deal volumes and total deal value witnessed drastic improvements. Thus, Raymond James’ advisory fees are likely to have improved.

The consensus estimate for IB fees is pegged at $250 million, suggesting 12.6% growth on a year-over-year basis.

Interest Income: Overall loan demand was decent in the quarter under review. Thus, despite the low interest-rate environment, Raymond James’ interest income is expected to have improved, supported by modest loan growth. The steepening of the yield curve is also expected to have provided support.

Interest income is largely accounted for in the company’s RJ Bank segment. The Zacks Consensus Estimate for the segment’s revenues of $175 million indicates 8.7% growth from the prior year.

Expenses: Raymond James consistently hires advisors and invests in franchises and thus, overall expenses are expected to have risen in the quarter. Due to a highly competitive environment, costs are expected to have been elevated.

Management Expectations

Based on the strong pipeline and activity levels, the company anticipates fixed-income brokerage results to remain elevated mainly in the Depository Client segment. Fiscal fourth-quarter IB revenues are expected to be $200 million.

In the Asset Management segment, results are expected to be positively impacted by higher financial assets under management, provided the equity markets remain resilient.

Given the prepayment speed of higher-yielding securities and mortgages, Raymond James Bank’s net interest margin is expected to decline to 1.90% in the fourth fiscal quarter.

Excluding debt extinguishment expenses, the company expects non-compensation expenses to continue to rise in the quarter as travel, recognition trips and conferences continue to resume.

Key Developments in Q4

In July, Raymond James announced its intention to make an offer for the entire issued and to-be-issued share capital of the U.K.-based Charles Stanley Group PLC for roughly $387 million (£279 million). The transaction is expected to close in the first quarter of fiscal 2022.

It will provide Raymond James with an opportunity to accelerate expansion in the lucrative U.K. market. Through Charles Stanley’s multiple affiliation options, the company will be able to offer wealth managers affiliation choices consistent with its model in Canada and the United States.

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 #3.

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:

Civista Bancshares, Inc. (CIVB Quick QuoteCIVB - Free Report) is scheduled to release results on Oct 27. The company currently carries a Zacks Rank #2 (Buy) and has an Earnings ESP of +5.32%.

Prosperity Bancshares, Inc. (PB Quick QuotePB - Free Report) is also scheduled to release earnings on Oct 27. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +0.06%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hilltop Holdings Inc. (HTH Quick QuoteHTH - Free Report) is scheduled to report quarterly results on Oct 28. The company currently has an Earnings ESP of +3.31% and a Zacks Rank of 2.