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Weak Investment Banking to Hurt Raymond James (RJF) Q2 Earnings
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Raymond James (RJF - Free Report) is scheduled to announce second-quarter fiscal 2022 (ended Mar 31) results on Apr 27, after market close. While earnings are expected to have witnessed a fall on a year-over-year basis, revenues are likely to have improved.
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 benefit 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 18.92%, on average.
Raymond James Financial, Inc. Price and EPS Surprise
The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at $1.62, which has moved 4.7% lower over the past 30 days. The figure indicates a decline of 3% from the year-ago quarter’s reported number.
The consensus estimate for sales of $2.62 billion suggests 10.5% year-over-year growth.
Factors to Influence Q2 Results
Investment Banking (IB) Fees: After an extremely robust performance for almost two years, deal-making came to a grinding halt in March. The ongoing Russia-Ukraine conflict (leading to choppiness in the equity markets worldwide) and ambiguity over the economic slowdown tied to inflation weighed on business sentiments. Thus, deal volume and total value witnessed a decline during the quarter under review. Thus, Raymond James’ advisory fees are likely to have been subdued.
Given the above-mentioned concerns, equity market performance was disappointing and thus, the IPOs and follow-up equity issuances almost dried up. On the other hand, bond issuances are likely to have been decent. Thus, RJF’s underwriting fees are expected to have been hurt in the quarter.
The consensus estimate for IB fees is pegged at $220 million, suggesting a 9.1% fall on a year-over-year basis.
Trading Revenues: Unlike the last few quarters, wherein market volatility and client activity were gradually normalizing, the overall trading business in the fiscal second quarter was a bright spot. The ongoing Russia-Ukraine conflict and prospects of multiple and bigger interest rate hikes by the Federal Reserve to control raging inflation numbers led to a rise in client activity and trading volume in the quarter. Thus, Raymond James’ trading revenues are likely to have been decent in the to-be-reported quarter.
Interest Income: The overall loan demand was quite impressive in the quarter under review. Thus, despite the continued low-interest-rate environment, Raymond James’ interest income is expected to have improved somewhat, supported by decent loan growth.
The company expects Raymond James Bank's net interest margin to be roughly 1.90% in second-quarter fiscal 2022.
Expenses: Raymond James consistently hires advisors and invests in franchises and thus, overall expenses are expected to have risen in the quarter. Moreover, due to a highly competitive environment, costs are expected to have been elevated.
Management expects costs to keep rising as travel, recognition trips and conferences continue to resume, and there is an increase in investments in technology and people.
Key Development in Q2
In January, RJF announced the completion of the deal to acquire U.K.-based Charles Stanley Group PLC. Charles Stanley is adding roughly £281 billion in client assets.
In March, to further boost its fixed income trading operations, Raymond James inked a deal to acquire SumRidge Partners, LLC. The financial details of the transaction were not disclosed.
Jersey City, NJ-based SumRidge is a technology-based “fixed income market maker” specializing in investment-grade and high-yield corporate bonds, municipal bonds and institutional-preferred securities. Its integration with Raymond James’ Fixed Income Capital Markets will complement “core client-facing business” and add sophisticated trading technologies and risk management tools.
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 couple of 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:
PB’s earnings estimates for the to-be-reported quarter has remained unchanged over the 30 days.
SouthState Corporation (SSB - Free Report) is scheduled to report quarterly earnings on Apr 28. The company, which carries a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +1.97%.
SSB’s earnings estimates for the to-be-reported quarter have moved 4.8% north over the 30 days.
Image: Bigstock
Weak Investment Banking to Hurt Raymond James (RJF) Q2 Earnings
Raymond James (RJF - Free Report) is scheduled to announce second-quarter fiscal 2022 (ended Mar 31) results on Apr 27, after market close. While earnings are expected to have witnessed a fall on a year-over-year basis, revenues are likely to have improved.
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 benefit 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 18.92%, 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 the company’s fiscal second-quarter earnings is pegged at $1.62, which has moved 4.7% lower over the past 30 days. The figure indicates a decline of 3% from the year-ago quarter’s reported number.
The consensus estimate for sales of $2.62 billion suggests 10.5% year-over-year growth.
Factors to Influence Q2 Results
Investment Banking (IB) Fees: After an extremely robust performance for almost two years, deal-making came to a grinding halt in March. The ongoing Russia-Ukraine conflict (leading to choppiness in the equity markets worldwide) and ambiguity over the economic slowdown tied to inflation weighed on business sentiments. Thus, deal volume and total value witnessed a decline during the quarter under review. Thus, Raymond James’ advisory fees are likely to have been subdued.
Given the above-mentioned concerns, equity market performance was disappointing and thus, the IPOs and follow-up equity issuances almost dried up. On the other hand, bond issuances are likely to have been decent. Thus, RJF’s underwriting fees are expected to have been hurt in the quarter.
The consensus estimate for IB fees is pegged at $220 million, suggesting a 9.1% fall on a year-over-year basis.
Trading Revenues: Unlike the last few quarters, wherein market volatility and client activity were gradually normalizing, the overall trading business in the fiscal second quarter was a bright spot. The ongoing Russia-Ukraine conflict and prospects of multiple and bigger interest rate hikes by the Federal Reserve to control raging inflation numbers led to a rise in client activity and trading volume in the quarter. Thus, Raymond James’ trading revenues are likely to have been decent in the to-be-reported quarter.
Interest Income: The overall loan demand was quite impressive in the quarter under review. Thus, despite the continued low-interest-rate environment, Raymond James’ interest income is expected to have improved somewhat, supported by decent loan growth.
The company expects Raymond James Bank's net interest margin to be roughly 1.90% in second-quarter fiscal 2022.
Expenses: Raymond James consistently hires advisors and invests in franchises and thus, overall expenses are expected to have risen in the quarter. Moreover, due to a highly competitive environment, costs are expected to have been elevated.
Management expects costs to keep rising as travel, recognition trips and conferences continue to resume, and there is an increase in investments in technology and people.
Key Development in Q2
In January, RJF announced the completion of the deal to acquire U.K.-based Charles Stanley Group PLC. Charles Stanley is adding roughly £281 billion in client assets.
In March, to further boost its fixed income trading operations, Raymond James inked a deal to acquire SumRidge Partners, LLC. The financial details of the transaction were not disclosed.
Jersey City, NJ-based SumRidge is a technology-based “fixed income market maker” specializing in investment-grade and high-yield corporate bonds, municipal bonds and institutional-preferred securities. Its integration with Raymond James’ Fixed Income Capital Markets will complement “core client-facing business” and add sophisticated trading technologies and risk management tools.
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 couple of 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:
Prosperity Bancshares, Inc. (PB - Free Report) is slated to report quarterly earnings on Apr 27. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +0.50%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PB’s earnings estimates for the to-be-reported quarter has remained unchanged over the 30 days.
SouthState Corporation (SSB - Free Report) is scheduled to report quarterly earnings on Apr 28. The company, which carries a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +1.97%.
SSB’s earnings estimates for the to-be-reported quarter have moved 4.8% north over the 30 days.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.