Raymond James Financial, Inc. (RJF - Free Report) announced a hike in its quarterly cash dividend of 22 cents per share, up 10% from the prior payout. The dividend will be paid on Jan 17, 2017, to shareholders on record as of Jan 3.
Considering last day’s closing price of $71.94 per share, the dividend yield currently stands at 1.2%. Notably, the company has been increasing dividend annually since 2012. Additionally, Raymond James has a share repurchase program in place. As of Sep 30, 2016, nearly $93 million worth of authorization was left.
Apart from this, the company has been meaningfully growing through strategic acquisitions. In September, Raymond James acquired U.S. Private Client Services unit of Deutsche Asset & Wealth Management (Deutsche AWM). Deutsche AWM is a corporate division of Deutsche Bank AG (DB - Free Report) . Earlier in June, the company announced a deal to acquire Germany-based Mummert & Company Corporate Finance GmbH, while in May it inked a deal to acquire MacDougall, MacDougall & MacTier Inc.
Further, Raymond James’ shares have gained 24.1% year to date compared with a 15.1% growth in the Zacks categorized Investment Brokers industry. Further, the company has a Momentum Style Score of ‘A’.
So, is it worth adding this Zacks Rank #2 (Buy) value enhancing stock to your investment portfolio? Let’s check out the company fundaments and growth prospects.
Earnings Strength: In the past 3–5 years, Raymond James witnessed earnings per share (EPS) growth of 19.6%. Also, the company’s earnings are projected to grow at the rate of 10.7% for 2016, as against a decline rate of 2.3% for the industry.
Further, earnings are anticipated to rise 5.9% year over year for 2017. In addition, the company’s long-term (3–5 years) estimated EPS growth rate of 17% (compared with the industry growth rate of 14.8%) promises rewards for investors over the long run.
Revenue Growth: Organic growth remains solid at Raymond James. Further, top line is expected to grow at the rate of 12% in 2016.
Rising Expenses: Elevated operating expenses continue to be a concern for Raymond James. Non-interest expenses have increased at a CAGR of 5.9% over the last four fiscal years (2013–2016). Though the company remains focused on disciplined expense management, regulatory changes and a highly competitive environment will likely lead to a further rise in expenses.
Valuation Looks Reasonable: Raymond James has a Value Style Score of ‘B.’ The Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of ‘A’ or ‘B,’ when combined with Zacks Rank #1 (Strong Buy) or #2, offer the best upside potential.
Leverage: State Street’s debt/equity ratio stands at 0.35 compared with the industry average of 0.21, indicating higher debt level relative to the industry.
Other Stocks Worth A Look
A couple of other investment brokerage firms worth considering include Stifel Financial Corp. (SF - Free Report) and E*TRADE Financial Corporation (ETFC - Free Report) .
Stifel Financial witnessed an upward earnings estimate revision of 8.9% over the past 60 days. Also, its share price is up 17.7% year to date. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
E*TRADE currently carries a Zacks Rank #2. It has witnessed an upward earnings estimate revision of 5.9% over the past 60 days and its share price is up 16.4% year to date.
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