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Here's Why You Should Buy Raymond James (RJF) Stock Now
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Raymond James (RJF - Free Report) is well-positioned for organic and inorganic expansion on the back of a solid balance sheet and liquidity position. Further, a turnaround in the capital markets business, especially investment banking, will support the company’s financials.
Analysts are also bullish on the stock’s earnings growth prospects. Over the past 60 days, the Zacks Consensus Estimate for earnings for both fiscal 2024 and fiscal 2025 has moved almost 1% north. RJF currently carries a Zacks Rank #2 (Buy).
Over the past three months, shares of Raymond James have rallied 15.6%, outperforming the industry’s growth of 8.3%.
Image Source: Zacks Investment Research
Here are a few factors that make RJF an attractive investment option now.
Earnings Growth: Raymond James has witnessed earnings growth of 17.6% in the past three to five years, driven by a solid top-line performance and strategic buyouts. The number is also impressive compared with the industry’s average of 7.1%.
With the operating backdrop turning favorable for investment banks, the company’s earnings are expected to continue the upward momentum. Hence, we expect earnings to grow at the rate of 6.2%, 2.9% and 11.1% in fiscal 2024, fiscal 2025 and fiscal 2026, respectively.
Revenue Strength: Raymond James remains focused on enhancing revenue growth. The company’s net revenues witnessed a CAGR of 9.8% in the last five fiscal years (2018-2023), primarily due to a rise in asset management and related administrative fees and decent capital markets performance.
Further, the company has been expanding through acquisitions, which also support its top-line growth. Our estimate for total net revenues implies a CAGR of 6% by fiscal 2026.
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. This has also helped the company expand internationally, mainly in Europe and Canada.
In September 2023, RJF acquired Canada-based Solus Trust Company Limited. In fiscal 2022, the company acquired SumRidge Partners, TriState Capital Holdings and the U.K.-based Charles Stanley Group PLC. These deals, along with several past ones, poise RJF well for future growth. Management looks forward to actively growing through acquisitions with an aim to further strengthen the Private Client Group and Asset Management segments.
Strong Balance Sheet: As of Dec 31, 2023, Raymond James had a total debt of $3.14 billion and cash and cash equivalents worth $10.2 billion. Given the 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.
Steady Capital Distributions: Raymond James has a track record of regularly raising dividends over the last decade. The last dividend hike of 7.1% was announced in November 2023. In the same month, the company authorized the repurchase of shares worth up to $1.5 billion. As of Jan 24, 2024, $1.39 billion remained under the buyback authorization.
Given a robust capital position and lower dividend payout ratio compared with peers, the company is expected to continue efficient capital distributions, thereby enhancing shareholder value.
Superior Return on Equity (ROE): Raymond James’ trailing 12-month ROE reflects its superiority in terms of utilizing shareholders’ funds. The company’s ROE of 17.95% compares favorably with 10.81% of the industry.
The Zacks Consensus Estimate for Interactive Brokers’ current-year earnings has been revised marginally upward over the past seven days. IBKR’s shares have risen 30.5% in the past three months.
Stifel Financial’s 2024 earnings estimates have been revised 1.4% north over the past 60 days. Over the past three months, shares of SF have gained 9.8%.
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Here's Why You Should Buy Raymond James (RJF) Stock Now
Raymond James (RJF - Free Report) is well-positioned for organic and inorganic expansion on the back of a solid balance sheet and liquidity position. Further, a turnaround in the capital markets business, especially investment banking, will support the company’s financials.
Analysts are also bullish on the stock’s earnings growth prospects. Over the past 60 days, the Zacks Consensus Estimate for earnings for both fiscal 2024 and fiscal 2025 has moved almost 1% north. RJF currently carries a Zacks Rank #2 (Buy).
Over the past three months, shares of Raymond James have rallied 15.6%, outperforming the industry’s growth of 8.3%.
Image Source: Zacks Investment Research
Here are a few factors that make RJF an attractive investment option now.
Earnings Growth: Raymond James has witnessed earnings growth of 17.6% in the past three to five years, driven by a solid top-line performance and strategic buyouts. The number is also impressive compared with the industry’s average of 7.1%.
With the operating backdrop turning favorable for investment banks, the company’s earnings are expected to continue the upward momentum. Hence, we expect earnings to grow at the rate of 6.2%, 2.9% and 11.1% in fiscal 2024, fiscal 2025 and fiscal 2026, respectively.
Revenue Strength: Raymond James remains focused on enhancing revenue growth. The company’s net revenues witnessed a CAGR of 9.8% in the last five fiscal years (2018-2023), primarily due to a rise in asset management and related administrative fees and decent capital markets performance.
Further, the company has been expanding through acquisitions, which also support its top-line growth. Our estimate for total net revenues implies a CAGR of 6% by fiscal 2026.
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. This has also helped the company expand internationally, mainly in Europe and Canada.
In September 2023, RJF acquired Canada-based Solus Trust Company Limited. In fiscal 2022, the company acquired SumRidge Partners, TriState Capital Holdings and the U.K.-based Charles Stanley Group PLC. These deals, along with several past ones, poise RJF well for future growth. Management looks forward to actively growing through acquisitions with an aim to further strengthen the Private Client Group and Asset Management segments.
Strong Balance Sheet: As of Dec 31, 2023, Raymond James had a total debt of $3.14 billion and cash and cash equivalents worth $10.2 billion. Given the 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.
Steady Capital Distributions: Raymond James has a track record of regularly raising dividends over the last decade. The last dividend hike of 7.1% was announced in November 2023. In the same month, the company authorized the repurchase of shares worth up to $1.5 billion. As of Jan 24, 2024, $1.39 billion remained under the buyback authorization.
Given a robust capital position and lower dividend payout ratio compared with peers, the company is expected to continue efficient capital distributions, thereby enhancing shareholder value.
Superior Return on Equity (ROE): Raymond James’ trailing 12-month ROE reflects its superiority in terms of utilizing shareholders’ funds. The company’s ROE of 17.95% compares favorably with 10.81% of the industry.
Other Stocks to Consider
A couple of other stocks from the investment management space worth a look are Interactive Brokers (IBKR - Free Report) and Stifel Financial (SF - Free Report) . Both the stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Interactive Brokers’ current-year earnings has been revised marginally upward over the past seven days. IBKR’s shares have risen 30.5% in the past three months.
Stifel Financial’s 2024 earnings estimates have been revised 1.4% north over the past 60 days. Over the past three months, shares of SF have gained 9.8%.