Raymond James (RJF Quick QuoteRJF - Free Report) is scheduled to announce first-quarter fiscal 2025 (ended Dec. 31) results on Jan. 29, after market close. The company’s 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 Asset Management segments was also solid. The acquisitions over the past years supported the company’s financials. However, higher non-interest expenses acted as a headwind. Further, RJF recorded provisions for the quarter.

Raymond James has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate thrice in the trailing four quarters and missed once, with the average beat being 7.78%.

The Zacks Consensus Estimate for the company’s fiscal first-quarter earnings is pegged at $2.75, which has remained unchanged over the past seven days. The figure indicates growth of 14.6% from the year-ago quarter.

The consensus estimate for sales of $3.48 billion suggests 15.4% year-over-year growth.

Key Performance Drivers for Raymond James’ Q1 Earnings

IB Fees: Following the subdued performance in the past two years, global mergers and acquisitions (M&A) demonstrated a marked improvement in the to-be-reported quarter. Both deal value and volumes were robust. This was driven by solid financial performance, robust U.S. economic growth, buoyant markets and interest rate cuts across the globe. Also, the potential easing of regulatory oversight on M&As by the Trump administration fueled deal-making activities. 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. An impressive equity market performance led to robust activity in follow-up equity issuances. Further, bond issuance volume was decent on favorable economic conditions and corporate spreads at near historical lows despite seasonally slow volumes in December. So, RJF’s underwriting fees are expected to have been positively impacted in the quarter.

The consensus estimate for IB fees is pegged at $256.1 million, suggesting a 41.5% jump on a year-over-year basis. We anticipate IB fees to be $226.5 million.

Trading Revenues: Client activity and market volatility were robust in the December-ended quarter. The likelihood of a strong economic expansion, cooling inflation and easing monetary policy 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): Since September 2024, the Federal Reserve has reduced interest rates by 100 basis points (bps). This is likely to have had a favorable impact on RJF’s NII to some extent as funding costs stabilized.

Further, the yield curve steepened and normalized during the quarter, which is likely to have supported NII on the back of improved yields on loans and securities. Lending activities improved in the to-be-reported quarter as per Fed’s latest data.

The Zacks Consensus Estimate for interest income stands at $1.04 billion, indicating a decline of 1.2%. Our estimate for the metric is $1.13 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 $2.74 billion, implying a 15.2% year-over-year increase.

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 -0.70%.

Zacks Rank: The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank 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 Synchrony Financial (SYF Quick QuoteSYF - Free Report) is +0.96% and it carries a Zacks Rank #3 at present. The company is slated to report fourth-quarter and full-year 2024 results on Jan. 28.

Over the past seven days, the Zacks Consensus Estimate for SYF’s quarterly earnings has remained unchanged at $1.90 per share.

Ameriprise Financial, Inc. (AMP Quick QuoteAMP - Free Report) is scheduled to release fourth-quarter and full-year 2024 numbers on Jan. 29. The company has an Earnings ESP of +1.73% and carries a Zacks Rank #3 at present.
 
Quarterly earnings estimates for AMP have been revised marginally downward to $8.94 per share over the past week.