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6 Reasons to Add Raymond James (RJF) Stock to Your Portfolio
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Raymond James (RJF - Free Report) is well positioned for organic and inorganic growth, given a solid balance sheet and capital position. Also, the company’s steady capital deployment actions will enhance shareholder value.
Analysts are optimistic about its growth potential. The Zacks Consensus Estimate for earnings has moved 1.1% and 8.1% upward for fiscal 2020 and fiscal 2021, respectively, over the past 30 days. The stock currently sports a Zacks Rank #1 (Strong Buy).
Shares of Raymond James have increased 33.7% over the past three months, underperforming the industry’s 45.2% rally.
Here are some of the factors that make Raymond James stock a solid pick right now:
Earnings Growth: Over the past three to five years, Raymond James has recorded an earnings growth of 22.8%, higher than the industry’s 15.6%. Though the current economic slowdown and a tough operating backdrop will likely result in earnings decline of 37.4% in fiscal 2020, the bottom line is projected to rise 35.9% in fiscal 2021.
Revenue Strength: Raymond James remains focused on enhancing revenue growth. The company’s revenues witnessed a CAGR of 14% in the last four years (2016-2019), with the trend continuing in the first six months of fiscal 2020. Its strategy to grow inorganically is paying off well. Although the company’s sales are expected to decline 1.6% in fiscal 2020, the top line is projected to grow at a rate of 3% in fiscal 2021.
Strong Balance Sheet: As of Mar 31, 2020, Raymond James had a total debt of $3.63 billion, and cash and cash equivalents worth $10.65 billion. The huge cash balance was mainly due to an increase in client cash balances resulting from market volatility at fiscal second quarter-end. Subsequently, the company undertook certain measures and in turn lowered the cash balance by nearly $4 billion. With no near-term debt maturities and solid earnings strength, there is a less likelihood that it will default on interest and/or debt repayments if the economic situation worsens further.
Synergies From Acquisitions: Raymond James has undertaken several strategic expansion plans over the past few years, driven by strong liquidity and balance sheet position. Last year, it acquired Silver Line Advisors and 100% stake in ClariVest Asset Management. Also, the company expanded in Europe and Canada with the help of opportunistic acquisitions. These deals position Raymond James well for future growth.
Steady Capital Deployments: Raymond James has a track record of regularly raising dividends over the last decade. The last dividend hike of 9% was announced in November 2019. The company also had a share repurchase authorization in place, which was suspended in mid-March in response to the COVID-19 outbreak, despite having a strong liquidity position. Given its robust capital position and lower dividend payout ratio than peers, the company is expected to sustain capital deployment activities, thereby continuing to enhance shareholder value.
Favorable VGM Score: Raymond James currently has a VGM Score of B. Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best upside potential.
Other Stocks to Consider
West Bancorporation’s (WTBA - Free Report) earnings estimates for the current year have moved up 13.9% over the past 60 days. The company’s shares have gained 13.9% over the past three months. At present, it sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Affiliated Managers Group’s (AMG - Free Report) earnings estimates for the current year have moved 2.6% upward over the past 60 days. The stock has appreciated 66.6% over the past three months. The company currently carries a Zacks Rank #2.
GAIN Capital Holdings’ earnings estimates for 2020 have increased significantly over the past 60 days. Further, the company’s shares have gained 28.3% over the past three months. At present, it has a Zacks Rank #2.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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6 Reasons to Add Raymond James (RJF) Stock to Your Portfolio
Raymond James (RJF - Free Report) is well positioned for organic and inorganic growth, given a solid balance sheet and capital position. Also, the company’s steady capital deployment actions will enhance shareholder value.
Analysts are optimistic about its growth potential. The Zacks Consensus Estimate for earnings has moved 1.1% and 8.1% upward for fiscal 2020 and fiscal 2021, respectively, over the past 30 days. The stock currently sports a Zacks Rank #1 (Strong Buy).
Shares of Raymond James have increased 33.7% over the past three months, underperforming the industry’s 45.2% rally.
Here are some of the factors that make Raymond James stock a solid pick right now:
Earnings Growth: Over the past three to five years, Raymond James has recorded an earnings growth of 22.8%, higher than the industry’s 15.6%. Though the current economic slowdown and a tough operating backdrop will likely result in earnings decline of 37.4% in fiscal 2020, the bottom line is projected to rise 35.9% in fiscal 2021.
Revenue Strength: Raymond James remains focused on enhancing revenue growth. The company’s revenues witnessed a CAGR of 14% in the last four years (2016-2019), with the trend continuing in the first six months of fiscal 2020. Its strategy to grow inorganically is paying off well. Although the company’s sales are expected to decline 1.6% in fiscal 2020, the top line is projected to grow at a rate of 3% in fiscal 2021.
Strong Balance Sheet: As of Mar 31, 2020, Raymond James had a total debt of $3.63 billion, and cash and cash equivalents worth $10.65 billion. The huge cash balance was mainly due to an increase in client cash balances resulting from market volatility at fiscal second quarter-end. Subsequently, the company undertook certain measures and in turn lowered the cash balance by nearly $4 billion. With no near-term debt maturities and solid earnings strength, there is a less likelihood that it will default on interest and/or debt repayments if the economic situation worsens further.
Synergies From Acquisitions: Raymond James has undertaken several strategic expansion plans over the past few years, driven by strong liquidity and balance sheet position. Last year, it acquired Silver Line Advisors and 100% stake in ClariVest Asset Management. Also, the company expanded in Europe and Canada with the help of opportunistic acquisitions. These deals position Raymond James well for future growth.
Steady Capital Deployments: Raymond James has a track record of regularly raising dividends over the last decade. The last dividend hike of 9% was announced in November 2019. The company also had a share repurchase authorization in place, which was suspended in mid-March in response to the COVID-19 outbreak, despite having a strong liquidity position. Given its robust capital position and lower dividend payout ratio than peers, the company is expected to sustain capital deployment activities, thereby continuing to enhance shareholder value.
Favorable VGM Score: Raymond James currently has a VGM Score of B. Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best upside potential.
Other Stocks to Consider
West Bancorporation’s (WTBA - Free Report) earnings estimates for the current year have moved up 13.9% over the past 60 days. The company’s shares have gained 13.9% over the past three months. At present, it sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Affiliated Managers Group’s (AMG - Free Report) earnings estimates for the current year have moved 2.6% upward over the past 60 days. The stock has appreciated 66.6% over the past three months. The company currently carries a Zacks Rank #2.
GAIN Capital Holdings’ earnings estimates for 2020 have increased significantly over the past 60 days. Further, the company’s shares have gained 28.3% over the past three months. At present, it has a Zacks Rank #2.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>