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Robust Trading & IB Performance to Support RJF's Q1 Earnings

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Key Takeaways

  • RJF's fiscal Q1 revenue is projected to rise 5.4% year over year to $3.73 billion.
  • Strong trading and advisory activity likely supported RJF's performance this quarter.
  • Raymond James' net interest income is estimated to rise 33.3% year over year to $551.8 million.

Raymond James (RJF - Free Report) is scheduled to announce first-quarter fiscal 2026 (ended Dec. 31) results on Jan. 28, after market close. While the company’s earnings are expected to have declined on a year-over-year basis, revenues are likely to have risen.

In the last reported quarter, RJF’s earnings beat the Zacks Consensus Estimate. Results benefited primarily from an increase in revenues. However, higher expenses were the undermining factor.

Raymond James does not have an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in only two of the trailing four quarters, with the average beat being 3.23%.
 

The Zacks Consensus Estimate for the company’s fiscal first-quarter earnings is currently pegged at $2.83, unchanged over the past seven days. The figure indicates a decline of 3.4% from the year-ago quarter.

The consensus estimate for sales of $3.73 billion suggests 5.4% year-over-year growth.

Management expects fiscal first-quarter asset management and related administrative fees to grow 6.5% sequentially, driven by higher PCG assets and fee-based accounts at quarter's end.

Factors at Play for Raymond James’ Q1 Earnings

Investment Banking (IB) Fees: Global mergers and acquisitions (M&As) in the December-ended quarter surged solidly from the lows witnessed in April and May following President Trump’s announcement of ‘Liberation Day’ tariff plans. As corporates adapted to the rapidly changing geopolitical and macroeconomic scenarios, M&A deals resumed. The quarter also saw a rise in M&A volume, driven by an easing of the buyer-seller valuation gap, lower capital costs and a focus on scale and AI integration. Thus, Raymond James’ advisory fees are expected to have been positively impacted.

The IPO market performance was impressive. Factors, including moderating inflation, lower rates and the ongoing AI boom, drove the rise. The global bond issuance volume was also robust. Thus, RJF’s underwriting fees are expected to have been positively impacted.

The consensus estimate for RJF’s IB fees is pegged at $276.4 million, implying a 15% decline on a year-over-year basis. 

Trading Revenues: The performance of RJF’s trading business is expected to have been strong in the to-be-reported quarter, supported by increased client activity and market volatility.  Factors that impacted trading business in the quarter included the longest U.S. government shutdown in history, a dip in consumer sentiment, easing monetary policy and a dominant AI-theme. Volatility was high in equity markets and other asset classes, including commodities, bonds and foreign exchange. 

Net Interest Income (NII): The Federal Reserve lowered interest rates by 50 basis points to 3.50-3.75% during the quarter. This, along with the rate cut in September, is likely to have hurt Morgan Stanley’s NII. However, a solid lending scenario and stabilizing funding/deposit costs are expected to have offered much-needed support. Hence, Raymond James’ NII might have witnessed a modest improvement in the quarter. 

The Zacks Consensus Estimate for NII s pegged at $551.8 million, indicating a year-over-year jump of 33.3%. 

Management expects aggregate NII and Raymond James Bank Deposit Program third-party fees to be stable on a sequential basis.

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.

What the Zacks Model Unveils for Raymond James

According to our proven model, the chances of RJF 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 are reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Raymond James is +1.06%.

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 around.

SEI Investments (SEIC - Free Report) is scheduled to report quarterly results on Jan. 28. The company has an Earnings ESP of +2.55% and a Zacks Rank #2 (Buy).

Over the past seven days, the Zacks Consensus Estimate for SEI Investments’ quarterly earnings has remained unchanged at $1.34.

The Earnings ESP for Blackstone (BX - Free Report) is +0.46%, and it carries a Zacks Rank #3. The company is slated to report fourth-quarter and full-year 2025 results on Jan. 29.

Over the past seven days, the Zacks Consensus Estimate for Blackstone’s quarterly earnings has been revised marginally lower to $1.51.


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