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Why Is Raymond James Financial (RJF) Down 11.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Raymond James Financial, Inc. (RJF - Free Report) . Shares have lost about 11.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Raymond James Financial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Raymond James' Q1 Earnings Beat on Solid IB Business & Brokerage
Raymond James’ first-quarter fiscal 2025 (ended Dec. 31) adjusted earnings of $2.93 per share handily surpassed the Zacks Consensus Estimate of $2.75. The bottom line surged 22% from the prior-year quarter.
Results benefited from robust IB and brokerage performance in the Capital Markets segment. The performance of the PCG 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.
Net income available to common shareholders (GAAP basis) was $599 million or $2.86 per share, up from $497 million or $2.32 per share in the prior-year quarter.
Revenues Improve, Expenses Rise
Quarterly net revenues were $3.54 billion, up 17% year over year. The top line outpaced the Zacks Consensus Estimate of $3.48 billion.
Segment-wise, in the reported quarter, the Private Client Group recorded 14% growth in net revenues, Asset Management’s net revenues rose 25% and Capital Markets’ top line jumped 42%. On the other hand, Bank registered a fall of 4% from the prior year's net revenues and Others recorded a 54% plunge in net revenues.
Non-interest expenses rose 17% from the prior-year quarter to $2.79 billion. The increase was largely due to a jump in compensation, commissions and benefits costs and investment sub-advisory fees. Our estimate for non-interest expenses was $2.74 billion. Further, RJF did not record any bank loan provision for credit losses in the reported quarter against $12 million in the prior-year quarter.
As of Dec. 31, 2024, client assets under administration were $1.56 trillion, up 14% from the prior-year quarter. Financial assets under management of $243.9 billion grew 13%. Our estimates for client assets under administration and financial assets under management were $1.62 trillion and $245.4 billion, respectively.
Balance Sheet & Capital Ratios Strong
As of Dec. 31, 2024, Raymond James has total assets of $82.28 billion, down 1% from the prior quarter. Total equity rose 2% to $11.84 billion.
Book value per share was $57.89, up from $51.32 as of Dec. 31, 2023.
As of Dec. 31, 2024, the total capital ratio was 25% compared with 23% as of Dec. 31, 2023. The Tier 1 capital ratio was 23.7% compared with 21.6% as of December 2023-end.
Return on common equity (annualized basis) was 20.4% at the end of the reported quarter compared with 19.1% a year ago.
Update on Share Repurchases
In the reported quarter, Raymond James repurchased 0.3 million shares for $50 million.
Outlook
For fiscal 2025, management expects non-compensation expenses, excluding the bank loan loss provision for credit losses, unexpected legal and regulatory items, and non-GAAP adjustments, to be roughly $2.1 billion, representing about 10% growth from the prior year’s adjusted non-compensation figure.
Given two fewer billing days in the second quarter of fiscal 2025, management anticipates aggregate NII and Raymond James Bank Deposit Program (RJBDP) third-party fees to be down 2-3% sequentially. Further, management expects asset management and related administrative fees to decline nearly 2% from the prior quarter.
For fiscal 2025, management estimates the effective tax rate to be approximately 24% to 25%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Raymond James Financial has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. It comes with little surprise Raymond James Financial has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Raymond James Financial (RJF) Down 11.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Raymond James Financial, Inc. (RJF - Free Report) . Shares have lost about 11.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Raymond James Financial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Raymond James' Q1 Earnings Beat on Solid IB Business & Brokerage
Raymond James’ first-quarter fiscal 2025 (ended Dec. 31) adjusted earnings of $2.93 per share handily surpassed the Zacks Consensus Estimate of $2.75. The bottom line surged 22% from the prior-year quarter.
Results benefited from robust IB and brokerage performance in the Capital Markets segment. The performance of the PCG 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.
Net income available to common shareholders (GAAP basis) was $599 million or $2.86 per share, up from $497 million or $2.32 per share in the prior-year quarter.
Revenues Improve, Expenses Rise
Quarterly net revenues were $3.54 billion, up 17% year over year. The top line outpaced the Zacks Consensus Estimate of $3.48 billion.
Segment-wise, in the reported quarter, the Private Client Group recorded 14% growth in net revenues, Asset Management’s net revenues rose 25% and Capital Markets’ top line jumped 42%. On the other hand, Bank registered a fall of 4% from the prior year's net revenues and Others recorded a 54% plunge in net revenues.
Non-interest expenses rose 17% from the prior-year quarter to $2.79 billion. The increase was largely due to a jump in compensation, commissions and benefits costs and investment sub-advisory fees. Our estimate for non-interest expenses was $2.74 billion. Further, RJF did not record any bank loan provision for credit losses in the reported quarter against $12 million in the prior-year quarter.
As of Dec. 31, 2024, client assets under administration were $1.56 trillion, up 14% from the prior-year quarter. Financial assets under management of $243.9 billion grew 13%. Our estimates for client assets under administration and financial assets under management were $1.62 trillion and $245.4 billion, respectively.
Balance Sheet & Capital Ratios Strong
As of Dec. 31, 2024, Raymond James has total assets of $82.28 billion, down 1% from the prior quarter. Total equity rose 2% to $11.84 billion.
Book value per share was $57.89, up from $51.32 as of Dec. 31, 2023.
As of Dec. 31, 2024, the total capital ratio was 25% compared with 23% as of Dec. 31, 2023. The Tier 1 capital ratio was 23.7% compared with 21.6% as of December 2023-end.
Return on common equity (annualized basis) was 20.4% at the end of the reported quarter compared with 19.1% a year ago.
Update on Share Repurchases
In the reported quarter, Raymond James repurchased 0.3 million shares for $50 million.
Outlook
For fiscal 2025, management expects non-compensation expenses, excluding the bank loan loss provision for credit losses, unexpected legal and regulatory items, and non-GAAP adjustments, to be roughly $2.1 billion, representing about 10% growth from the prior year’s adjusted non-compensation figure.
Given two fewer billing days in the second quarter of fiscal 2025, management anticipates aggregate NII and Raymond James Bank Deposit Program (RJBDP) third-party fees to be down 2-3% sequentially. Further, management expects asset management and related administrative fees to decline nearly 2% from the prior quarter.
For fiscal 2025, management estimates the effective tax rate to be approximately 24% to 25%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Raymond James Financial has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. It comes with little surprise Raymond James Financial has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.