It has been about a month since the last earnings report for Raymond James Financial, Inc. (RJF Quick QuoteRJF - Free Report) . Shares have added about 1.2% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Raymond James Financial due for a pullback? 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' Q2 Earnings Miss, Revenues Rise Y/Y

Raymond James’ second-quarter fiscal 2024 (ended Mar 31) adjusted earnings of $2.31 per share missed the Zacks Consensus Estimate by a penny. The bottom line, however, was up 14% from the prior-year quarter.

Results were adversely impacted by higher non-interest expenses. Also, RJF recorded bank loan provision for credit losses during the quarter on the tough macroeconomic outlook. However, robust investment banking and brokerage performance aided the Capital Markets segment’s results. The performance of the Private Client Group and the Asset Management segments was also decent. The acquisitions over the past years supported the company’s financials to some extent.

Net income available to common shareholders (GAAP basis) was $474 million or $2.22 per share, up from $425 million or $1.93 per share in the prior-year quarter.

Revenues Improve, Costs Rise

Net revenues were $3.12 billion, up 9% year over year. The top line matched the Zacks Consensus Estimate.

Segment-wise, in the reported quarter, the Private Client Group recorded 9% growth in net revenues, Asset Management’s net revenues rose 17%, and Capital Markets’ top line increased 6%. Further, Others witnessed a 70% jump in revenues. Bank registered a fall of 21% from the prior year in net revenues.

Non-interest expenses rose 8% year over year to $2.51 billion. The increase was largely due to higher compensation, commissions and benefits costs and investment sub-advisory fees. Our estimate for non-interest expenses was also $2.44 billion. Also, RJF recorded a bank loan provision for credit losses of $21 million.

As of Mar 31, 2024, client assets under administration were $1.45 trillion, up 18% from the end of the prior-year quarter. Financial assets under management of $226.8 billion grew 17%. Our estimates for client assets under administration and financial assets under management were $1.32 trillion and $206.2 billion, respectively.

Balance Sheet & Capital Ratios Strong

As of Mar 31, 2024, Raymond James has total assets of $81.23 billion, up 1% from the prior quarter. Total equity rose 2% sequentially to $10.91 billion.
Book value per share was $52.60, up from $46.67 as of Mar 31, 2023.

As of Mar 31, 2024, the total capital ratio was 23.3% compared with 21.4% as of Mar 31, 2023. The Tier 1 capital ratio was 21.9% compared with 20.1% as of March 2023-end.

Return on common equity (annualized basis) was 17.5% at the end of the reported quarter compared with 17.3% a year ago.

Share Repurchase Update

In the reported quarter, RJF repurchased 1.7 million shares for $207 million.

Outlook

The company expects combined net interest income and RJBDP fees from third-party banks to be largely dependent on short-term interest rates, stability of client cash balance and loan growth trajectory.

For fiscal 2024, the company expects non-compensation expenses, excluding provision for credit losses and unexpected legal and regulatory items, to be $1.9 billion.

In the Private Client Group, the fiscal third-quarter results are expected to be positively impacted by the 7% sequential increase in assets and fee-based accounts.

The effective tax rate is expected to be 24% on a quarterly basis.

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 has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, 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 C. 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 indicates a downward shift. Notably, Raymond James Financial 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 is part of the Zacks Financial - Investment Bank industry. Over the past month, Interactive Brokers Group, Inc. (IBKR Quick QuoteIBKR - Free Report) , a stock from the same industry, has gained 6%. The company reported its results for the quarter ended March 2024 more than a month ago.

Interactive Brokers reported revenues of $1.2 billion in the last reported quarter, representing a year-over-year change of +13.9%. EPS of $1.64 for the same period compares with $1.35 a year ago.

Interactive Brokers is expected to post earnings of $1.59 per share for the current quarter, representing a year-over-year change of +20.5%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.4%.

Interactive Brokers has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.