Raymond James Financial, Inc. (RJF) Down 6% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Raymond James Financial, Inc. (RJF). Shares have lost about 6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Raymond James Financial, Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Raymond James Q3 Earnings Miss, Revenues Rise Y/Y
Raymond James’ third-quarter fiscal 2023 (ended Jun 30) adjusted earnings of $1.85 per share missed the Zacks Consensus Estimate of $2.10 by a considerable margin. The bottom line, however, was up 15% from the prior-year quarter.
A muted IB performance hurt the Capital Markets segment’s results. Also, RJF recorded bank loan provision for credit losses during the quarter on the deteriorating macroeconomic outlook. Further, expenses increased during the quarter.
Yet, higher interest rates and a rise in loan demand acted as tailwinds, which led to a substantial jump in net interest income (NII). The performance of the Private Client Group was robust. The acquisitions over the past years also supported the company’s financials to some extent.
Net income available to common shareholders (GAAP basis) was $369 million, up 23% year over year.
Revenues & Costs Rise
Net revenues were $2.91 billion, up 7% year over year. The top line also beat the Zacks Consensus Estimate of $2.89 billion.
Segment-wise, in the reported quarter, RJ Bank registered a surge of 86% from the prior year in net revenues. Also, the Private Client Group recorded 11% growth in net revenues. Capital Markets’ top line declined 28%, while Asset Management’s net revenues fell 1%. Others recorded revenues of $15 million against negative revenues of $21 million in the prior-year quarter.
Non-interest expenses rose 5% to $2.42 billion. Our estimate for non-interest expenses was $2.34 billion. Also, RJF recorded a bank loan provision for credit losses of $54 million.
As of Jun 30, 2023, client assets under administration were $1.28 trillion, up 14% from the end of the prior-year quarter. Financial assets under management of $200.7 billion grew 10%.
Strong Balance Sheet & Capital Ratios
As of Jun 30, 2023, Raymond James has total assets of $77.63 billion, down 2% from the prior quarter. Total equity was stable at $9.9 billion.
Book value per share was $47.34, up from $43.60 as of Jun 30, 2022.
As of Jun 30, 2023, total capital ratio was 22% compared with 21.5% as of Jun 30, 2022. Tier 1 capital ratio was 20.6% compared with 20% as of June 2022-end.
Return on common equity (annualized basis) was 14.9% at the end of the reported quarter compared with 13.3% a year ago.
Share Repurchase Update
During the reported quarter, RJF repurchased 3.31 million shares for $300 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Raymond James Financial, Inc. has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Raymond James Financial, Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Raymond James Financial, Inc. is part of the Zacks Financial - Investment Bank industry. Over the past month, Interactive Brokers Group, Inc. (IBKR), a stock from the same industry, has gained 5.7%. The company reported its results for the quarter ended June 2023 more than a month ago.
Interactive Brokers Group, Inc. reported revenues of $1 billion in the last reported quarter, representing a year-over-year change of +52.4%. EPS of $1.32 for the same period compares with $0.84 a year ago.
For the current quarter, Interactive Brokers Group, Inc. is expected to post earnings of $1.43 per share, indicating a change of +32.4% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.4% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Interactive Brokers Group, Inc. Also, the stock has a VGM Score of F.
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