Raymond James ( RJF Quick Quote RJF - Free Report) is well positioned for organic and inorganic expansion on the back of a solid balance sheet and liquidity position. The company’s substantial capital deployments will enhance shareholder value. In addition, analysts are bullish on the stock’s earnings growth prospects. Over the past 60 days, the Zacks Consensus Estimate for earnings has moved 8.2% and 10.9% northward for fiscal 2022 and 2023, respectively. RJS currently sports a Zacks Rank #1 (Strong Buy). So far this year, shares of Raymond James have rallied 27.4% against the industry’s 2.3% decline. Image Source: Zacks Investment Research
Mentioned below are few factors that make RJF an attractive investment option now.
Earnings Growth: The company has witnessed earnings per share growth of 14.5% in the past three to five years. The company’s earnings are projected to grow 4.3% and 17.4% in fiscal 2022 and fiscal 2023, respectively. Moreover, Raymond James has an impressive earnings surprise history. The company's earnings have surpassed the Zacks Consensus Estimate in all of the trailing four quarters, the average beat being 18.92%. Revenue Strength: Raymond James remains focused on enhancing revenue growth. The company’s total revenues witnessed a compounded annual growth rate of 11% in the last five fiscal years (2017-2021), primarily due to a rise in asset management and related administrative fees. The company’s sales are expected to grow 13.5% for fiscal 2022 and 11.7% for fiscal 2023. Strong Balance Sheet: As of Dec 31, 2021, Raymond James had total debt of $3 billion, and cash and cash equivalents worth $8.2 billion. Given the sequential improvement in the first-quarter fiscal 2022 debt/total equity ratio, investment-grade ratings and stable outlook from rating agencies, as well as solid earnings strength, there is less likelihood of the company defaulting on its debt obligations even if the economic situation worsens. Synergies From Opportunistic Buyouts: Raymond James has undertaken several strategic expansion plans over the past few years, driven by its strong liquidity and balance sheet positions. In January 2022, the company acquired U.K.-based Charles Stanley Group PLC, while in October 2021, it announced a deal to acquire TriStateCapital Holdings, Inc. In fiscal 2021, it acquired Cebile Capital and a boutique investment bank, Financo. In fiscal 2020, it bought out NWPS Holdings, Inc. The company has expanded into Europe and Canada with the help of such strategic acquisitions. Management expects to grow through such acquisitions with an aim to further strengthen the Private Client Group and Asset Management segments. Steady Capital Deployments: Raymond James has a track record of regularly raising dividends over the last decade. The last dividend hike of 30.8% was announced in December 2021. Further, in the same month, it authorized the repurchase of shares worth up to $1 billion, with no expiration date. As of Jan 22, 2022, the whole authorization remained available. Given its robust capital position and lower dividend-payout ratio than its peers, the company is expected to sustain capital deployment activities.
Other Stocks to Consider
A couple of other stocks from the finance space worth a look are
Morgan Stanley ( MS Quick Quote MS - Free Report) and First Business Financial Services ( FBIZ Quick Quote FBIZ - Free Report) . Morgan Stanley carries a Zacks Rank #2 (Buy) while FBIZ sports a Zacks Rank #1. You can see . the complete list of today’s Zacks #1 Rank stocks here The Zacks Consensus Estimate for Morgan Stanley’s current-year earnings has been revised 4.2% upward over the past 60 days. MS’s shares have risen 6.5% in the past year. First Business recorded an upward earnings estimate revision of 9% for 2022 over the past 60 days. The FBIZ stock has jumped 24.6% in the past year.