Raymond James (RJF Quick QuoteRJF - Free Report) is scheduled to announce fourth-quarter fiscal 2024 (ended Sept. 30) results on Oct. 23, after market close. Quarterly earnings and revenues are expected to have witnessed a rise on a year-over-year basis.

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In the last quarter, RJF’s earnings beat the Zacks Consensus Estimate. Results benefited from robust investment banking (IB) and brokerage performance in the Capital Markets segment. The performance of the Private Client Group and the Asset Management segments was also solid. Acquisitions over the years have supported the company’s financials. Further, RJF recorded a provision benefit in the quarter. However, higher non-interest expenses acted as a headwind.

Raymond James has a decent earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate twice in the trailing four quarters and missed twice, with the average beat being 0.78%.

The Zacks Consensus Estimate for the company’s fiscal fourth-quarter earnings is pegged at $2.45, which has been revised marginally lower over the past seven days. The figure indicates growth of 15% from the year-ago quarter.

The consensus estimate for sales of $3.31 billion suggests 8.5% year-over-year growth.

Key Performance Drivers for Raymond James

IB Fees: Following the subdued performance in 2022 and 2023, global mergers and acquisitions demonstrated a marked improvement in the to-be-reported quarter. Both deal value and volumes were decent. This was driven by solid financial performance, higher chances of a soft landing of the U.S. economy, and a recently implemented interest rate cut amid tough scrutiny by antitrust regulators and lingering geopolitical tensions. Thus, these are expected to have supported Raymond James’ advisory fees.

On the other hand, the IPO market saw signs of cautious optimism due to market volatility, geopolitical concerns and global monetary easing. A solid equity market performance led to some robust activity in follow-up equity issuances. Bond issuance volumes were bolstered by lower spreads (near historical lows) and a favorable operating backdrop. So, RJF’s underwriting fees are expected to have been positively impacted in the quarter.

The consensus estimate for IB fees is pegged at $202.6 million, suggesting a marginal rise on a year-over-year basis. We anticipate IB fees to be $196.6 million.

Trading Revenues: Client activity improved in the quarter under review. The expectations of a soft landing of the U.S. economy and a gradually cooling inflation drove client activity. Further, volatility was high in equity markets and other asset classes, including commodities, bonds, and foreign exchange.

So, Raymond James’ trading revenues are likely to have witnessed decent growth.

Net Interest Income (NII): On Sept. 18, the Federal Reserve announced a 50-basis point rate cut for the first time since March 2020. The impact on RJF’s NII during the third quarter is unlikely to have been significant.

Further, the inverted yield curve remained for the major part of the quarter, and high funding costs are expected to have weighed on interest income. Lending activities improved in the to-be-reported quarter as per Fed’s latest data.

The Zacks Consensus Estimate for interest income stands at $1.06 billion, indicating a rise of 4.3%. Our estimate for the metric is $1.08 billion.

Expenses: Raymond James consistently hires advisors and invests in franchises. Thus, overall expenses are expected to have increased in the to-be-reported quarter. Due to a highly competitive environment, costs might have risen.

We project total non-interest expenses to be $2.63 billion, implying a 6.6% year-over-year increase.

For fiscal 2024, the company expects non-compensation expenses, excluding provision for credit losses and unexpected legal and regulatory items, to be $1.9 billion. The adjusted compensation ratio is expected to be less than 65%.

RJF Management’s Q4 Expectations

Based on spot rates at the end of the fiscal third quarter, the company expects NII and RJBDP third-party fees to be flat or down slightly.

In the Private Client Group, results are expected to be positively impacted by the 3% sequential increase in assets and fee-based accounts.

What the Zacks Model Unveils for Raymond James

According to our proven model, the chances of Raymond James beating the Zacks Consensus Estimate this time are low. This is because it lacks the right combination of two key ingredients — a positive Earnings ESP and a 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 -0.64%.

Zacks Rank: The company currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Finance 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:

The Earnings ESP for Cathay General Bancorp (CATY Quick QuoteCATY - Free Report) is +1.20%. The stock carries a Zacks Rank #3 at present. The company is slated to report third-quarter 2024 results on Oct. 21.

Over the past seven days, the Zacks Consensus Estimate for CATY’s quarterly earnings has remained unchanged at 98 cents per share.

Zions Bancorporation (ZION Quick QuoteZION - Free Report) is scheduled to release quarterly numbers on Oct. 21. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +1.19%. ZION’s quarterly earnings estimates have remained unchanged at $1.16 per share over the past month.