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Robust Trading & IB to Support RJF's Q3 Earnings, High Costs to Hurt
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Key Takeaways
RJF is expected to have recorded higher Q3 revenues, while earnings might have dipped year over year.
Strong IB and trading activity are likely to have driven fee income in a volatile market backdrop.
Non-interest expenses are likely to have risen nearly 6% due to advisor hiring and inflationary pressures.
Raymond James (RJF - Free Report) is scheduled to announce third-quarter fiscal 2025 (ended June 30) results on July 23, after market close. The company’s earnings are expected to have declined marginally, while revenues are likely to have witnessed a rise on a year-over-year basis.
In the last quarter, RJF’s earnings missed the Zacks Consensus Estimate. Results were adversely impacted by higher non-interest expenses and subdued IB performance. However, decent brokerage performance in the Capital Markets segment and robust performance of the Private Client Group and Asset Management segments offered support. The acquisitions over the past years aided the company’s financials.
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 7.65%.
Raymond James Financial, Inc. Price and EPS Surprise
The Zacks Consensus Estimate for the company’s fiscal third-quarter earnings is pegged at $2.37, which has remained unchanged over the past seven days. The figure indicates a decline of almost 1% from the year-ago quarter.
The consensus estimate for sales of $3.36 billion suggests 4.1% growth.
Major Factors at Play for Raymond James’ Q3 Earnings
IB Fees: Global mergers and acquisitions (M&As) in the to-be-reported quarter were better-than-expected. Markets plunged in early April after Trump announced sweeping tariffs, rattling business confidence. But as trade demands eased and policy direction became clearer, deal-making activities resumed in the latter part of the quarter. As such, Raymond James’ advisory fees are expected to have risen.
The IPO market in the quarter saw a resurgence, with a significant increase in both the number of IPOs and the amount of capital raised. Further, global bond issuance volume was decent. Thus, RJF’s underwriting fees are expected to have been positively impacted in the quarter.
The consensus estimate for IB fees is pegged at $212.1 million, suggesting a 15.9% jump on a year-over-year basis. We anticipate IB fees to be $292 million.
Trading Revenues: Client activity and market volatility were robust in the June-ended quarter. The likelihood of a trade war and higher-for-longer interest rates 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 solid growth.
Net Interest Income (NII): The Federal Reserve kept interest rates unchanged at 4.25-4.5% during the quarter due to uncertainties regarding the impact of tariff policies. This is likely to have had a favorable impact on RJF’s NII to some extent, with higher yields being partially offset by higher funding costs. Further, lending activities improved in the to-be-reported quarter as per the Fed’s latest data.
The Zacks Consensus Estimate for interest income is pegged at $980.4 million, indicating a decline of 7.2%. Our estimate for the metric is $1.01 billion.
Management anticipates aggregate NII and Raymond James Bank Deposit Program (RJBDP) third-party fees to benefit sequentially, while a lower balance in the bank deposit program will offset the gain in the third quarter of fiscal 2025.
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 and inflationary pressure, expenses are likely to have risen.
We project total non-interest expenses to be $2.74 billion, implying a 5.9% 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 high. This is because it has 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 +1.24%.
Here are a couple of other finance stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time: (Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.)
Invesco (IVZ - Free Report) is scheduled to release second-quarter 2025 earnings on July 22. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +1.65%.
The quarterly earnings estimates for Invesco have been revised 2.6% upward to 40 cents over the past week.
Lazard, Inc. (LAZ - Free Report) is slated to announce second-quarter 2025 earnings on July 24. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +2.21%.
Lazard’s quarterly earnings estimates have been revised 2.7% north at 38 cents over the past seven days.
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Robust Trading & IB to Support RJF's Q3 Earnings, High Costs to Hurt
Key Takeaways
Raymond James (RJF - Free Report) is scheduled to announce third-quarter fiscal 2025 (ended June 30) results on July 23, after market close. The company’s earnings are expected to have declined marginally, while revenues are likely to have witnessed a rise on a year-over-year basis.
In the last quarter, RJF’s earnings missed the Zacks Consensus Estimate. Results were adversely impacted by higher non-interest expenses and subdued IB performance. However, decent brokerage performance in the Capital Markets segment and robust performance of the Private Client Group and Asset Management segments offered support. The acquisitions over the past years aided the company’s financials.
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 7.65%.
Raymond James Financial, Inc. Price and EPS Surprise
Raymond James Financial, Inc. price-eps-surprise | Raymond James Financial, Inc. Quote
The Zacks Consensus Estimate for the company’s fiscal third-quarter earnings is pegged at $2.37, which has remained unchanged over the past seven days. The figure indicates a decline of almost 1% from the year-ago quarter.
The consensus estimate for sales of $3.36 billion suggests 4.1% growth.
Major Factors at Play for Raymond James’ Q3 Earnings
IB Fees: Global mergers and acquisitions (M&As) in the to-be-reported quarter were better-than-expected. Markets plunged in early April after Trump announced sweeping tariffs, rattling business confidence. But as trade demands eased and policy direction became clearer, deal-making activities resumed in the latter part of the quarter. As such, Raymond James’ advisory fees are expected to have risen.
The IPO market in the quarter saw a resurgence, with a significant increase in both the number of IPOs and the amount of capital raised. Further, global bond issuance volume was decent. Thus, RJF’s underwriting fees are expected to have been positively impacted in the quarter.
The consensus estimate for IB fees is pegged at $212.1 million, suggesting a 15.9% jump on a year-over-year basis. We anticipate IB fees to be $292 million.
Trading Revenues: Client activity and market volatility were robust in the June-ended quarter. The likelihood of a trade war and higher-for-longer interest rates 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 solid growth.
Net Interest Income (NII): The Federal Reserve kept interest rates unchanged at 4.25-4.5% during the quarter due to uncertainties regarding the impact of tariff policies. This is likely to have had a favorable impact on RJF’s NII to some extent, with higher yields being partially offset by higher funding costs. Further, lending activities improved in the to-be-reported quarter as per the Fed’s latest data.
The Zacks Consensus Estimate for interest income is pegged at $980.4 million, indicating a decline of 7.2%. Our estimate for the metric is $1.01 billion.
Management anticipates aggregate NII and Raymond James Bank Deposit Program (RJBDP) third-party fees to benefit sequentially, while a lower balance in the bank deposit program will offset the gain in the third quarter of fiscal 2025.
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 and inflationary pressure, expenses are likely to have risen.
We project total non-interest expenses to be $2.74 billion, implying a 5.9% 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 high. This is because it has 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 +1.24%.
Zacks Rank: The company currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Finance Stocks Worth Considering
Here are a couple of other finance stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time: (Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.)
Invesco (IVZ - Free Report) is scheduled to release second-quarter 2025 earnings on July 22. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +1.65%.
The quarterly earnings estimates for Invesco have been revised 2.6% upward to 40 cents over the past week.
Lazard, Inc. (LAZ - Free Report) is slated to announce second-quarter 2025 earnings on July 24. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +2.21%.
Lazard’s quarterly earnings estimates have been revised 2.7% north at 38 cents over the past seven days.