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Will Raymond James Financial, Inc.’s (NYSE:RJF) Earnings Grow Over The Next Few Years?

Armando Maloney

The latest earnings update Raymond James Financial, Inc. (NYSE:RJF) released in September 2018 confirmed that the business experienced a robust tailwind, eventuating to a double-digit earnings growth of 35%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive Raymond James Financial’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

View our latest analysis for Raymond James Financial

Market analysts’ prospects for this coming year seems optimistic, with earnings climbing by a robust 27%. This growth seems to continue into the following year with rates reaching double digit 37% compared to today’s earnings, and finally hitting US$1.3b by 2022.

NYSE:RJF Future Profit January 8th 19

Although it is informative knowing the growth year by year relative to today’s value, it may be more valuable determining the rate at which the earnings are growing on average every year. The benefit of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Raymond James Financial’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 13%. This means, we can assume Raymond James Financial will grow its earnings by 13% every year for the next couple of years.

Next Steps:

For Raymond James Financial, I’ve put together three essential factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is RJF worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether RJF is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of RJF? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.