Raymond James Financial (RJF - Cramer's Take - Stockpickr), which through its subsidiaries underwrites, distributes, trades and brokers equity and debt securities, has been downgraded to hold. Robust revenue growth, a solid financial position and a reasonable valuation are balanced by a disappointing stock-price performance, weak return on equity and poor profit margins.
For the first quarter, revenue rose 17% year over year to $829.2 million, and earnings per share declined. The company's debt-to-equity ratio, 0.54, is low and is below the industry average, implying that there has been successful management of debt levels. Return on equity has slightly decreased from the same quarter one year prior, implying a minor weakness in the organization.
The gross profit margin, at 29%, is less than what is desirable. Raymond James Financial had been rated buy since TheStreet.com Ratings initiated coverage on March 28, 2006.