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Solid IB, Trading to Support Raymond James (RJF) Q3 Earnings
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Raymond James (RJF - Free Report) is scheduled to announce third-quarter fiscal 2024 (ended Jun 30) results on Jul 24, after market close. Earnings and revenues are expected to have witnessed a rise on a year-over-year basis.
In the last quarter, RJF’s earnings lagged the Zacks Consensus Estimate. An increase in non-interest expenses and bank loan provisions hurt the results. Yet, robust investment banking (IB) 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.
Raymond James doesn’t have a solid earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate only once in the trailing four quarters.
Raymond James Financial, Inc. Price and EPS Surprise
The Zacks Consensus Estimate for the company’s fiscal third-quarter earnings is pegged at $2.30, which has remained unchanged over the past seven days. The figure indicates growth of 24.3% from the year-ago quarter.
The consensus estimate for sales of $3.21 billion suggests 10.4% year-over-year growth.
Factors at Play
IB Fees: Following the subdued performance in 2022 and 2023, global mergers and acquisitions bounced back in the to-be-reported quarter. Both deal value and volumes witnessed a noteworthy resurgence driven by solid financial performance, buoyant markets and expected rate cuts later this year. Yet, tough scrutiny by antitrust regulators and lingering geopolitical tensions were concerns. Thus, the deal volume and total value numbers were decent in the quarter, which might have supported Raymond James’ advisory fees.
Further, strong equity market performance in the quarter drove the IPO activities. This also supported solid activity in follow-up equity issuances. Bond issuance volumes were bolstered by lower yields and a better operating backdrop compared with last year. So, RJF’s underwriting fees are expected to have been positively impacted in the quarter.
The consensus estimate for IB fees is pegged at $182 million, suggesting a 9.9% fall on a year-over-year basis. We anticipate IB fees of $180.1 million.
Trading Revenues: Client activity was decent in the quarter. The expectations of a soft landing of the U.S. economy and a gradually cooling inflation drove client activity. However, volatility was low in equity markets and other asset classes, including commodities, bonds and foreign exchange.
So, Raymond James’ trading revenues are likely to have witnessed modest growth.
Net Interest Income: Lending activities improved marginally in the to-be-reported quarter. Continuing with its efforts to curb inflation, the Federal Reserve kept the interest rates unchanged at a 23-year high of 5.25-5.5%. While this is likely to have had a favorable impact on RJF’s net interest income (NII), the inversion of the yield curve in the June-ended quarter and higher deposit costs are expected to have weighed on it to some extent.
The Zacks Consensus Estimate for interest income stands at $1.05 billion, indicating a rise of 33%. Our estimate for the metric is $1.08 billion.
Expenses: Raymond James consistently hires advisors and invests in franchises. Thus, overall expenses are expected to have increased in the to-be-reported quarter. Due to a highly competitive environment, costs might have risen.
We project total non-interest expenses to be $2.58 billion, implying 6.7% year-over-year increase.
Management’s Q3 Expectations
The company expects combined NII 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.
The Private Client Group segment results are expected to be favorably impacted by the 7% sequential increase of assets in fee-based accounts.
What the Zacks Model Unveils
According to our proven model, the chances of Raymond James beating the Zacks Consensus Estimate this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Raymond James is +1.38%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Other Finance Stocks Worth a Look
Here are a couple of other finance stocks that you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this time:
The Earnings ESP for Capital One Financial (COF - Free Report) is +1.16%. The stock carries a Zacks Rank #3 at present. The company is slated to report second-quarter 2024 results on Jul 23.
Over the past seven days, the Zacks Consensus Estimate for COF’s quarterly earnings has moved 9% north to $3.28 per share.
Image: Bigstock
Solid IB, Trading to Support Raymond James (RJF) Q3 Earnings
Raymond James (RJF - Free Report) is scheduled to announce third-quarter fiscal 2024 (ended Jun 30) results on Jul 24, after market close. Earnings and revenues are expected to have witnessed a rise on a year-over-year basis.
In the last quarter, RJF’s earnings lagged the Zacks Consensus Estimate. An increase in non-interest expenses and bank loan provisions hurt the results. Yet, robust investment banking (IB) 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.
Raymond James doesn’t have a solid earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate only once in the trailing four quarters.
Raymond James Financial, Inc. Price and EPS Surprise
Raymond James Financial, Inc. price-eps-surprise | Raymond James Financial, Inc. Quote
The Zacks Consensus Estimate for the company’s fiscal third-quarter earnings is pegged at $2.30, which has remained unchanged over the past seven days. The figure indicates growth of 24.3% from the year-ago quarter.
The consensus estimate for sales of $3.21 billion suggests 10.4% year-over-year growth.
Factors at Play
IB Fees: Following the subdued performance in 2022 and 2023, global mergers and acquisitions bounced back in the to-be-reported quarter. Both deal value and volumes witnessed a noteworthy resurgence driven by solid financial performance, buoyant markets and expected rate cuts later this year. Yet, tough scrutiny by antitrust regulators and lingering geopolitical tensions were concerns. Thus, the deal volume and total value numbers were decent in the quarter, which might have supported Raymond James’ advisory fees.
Further, strong equity market performance in the quarter drove the IPO activities. This also supported solid activity in follow-up equity issuances. Bond issuance volumes were bolstered by lower yields and a better operating backdrop compared with last year. So, RJF’s underwriting fees are expected to have been positively impacted in the quarter.
The consensus estimate for IB fees is pegged at $182 million, suggesting a 9.9% fall on a year-over-year basis. We anticipate IB fees of $180.1 million.
Trading Revenues: Client activity was decent in the quarter. The expectations of a soft landing of the U.S. economy and a gradually cooling inflation drove client activity. However, volatility was low in equity markets and other asset classes, including commodities, bonds and foreign exchange.
So, Raymond James’ trading revenues are likely to have witnessed modest growth.
Net Interest Income: Lending activities improved marginally in the to-be-reported quarter. Continuing with its efforts to curb inflation, the Federal Reserve kept the interest rates unchanged at a 23-year high of 5.25-5.5%. While this is likely to have had a favorable impact on RJF’s net interest income (NII), the inversion of the yield curve in the June-ended quarter and higher deposit costs are expected to have weighed on it to some extent.
The Zacks Consensus Estimate for interest income stands at $1.05 billion, indicating a rise of 33%. Our estimate for the metric is $1.08 billion.
Expenses: Raymond James consistently hires advisors and invests in franchises. Thus, overall expenses are expected to have increased in the to-be-reported quarter. Due to a highly competitive environment, costs might have risen.
We project total non-interest expenses to be $2.58 billion, implying 6.7% year-over-year increase.
Management’s Q3 Expectations
The company expects combined NII 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.
The Private Client Group segment results are expected to be favorably impacted by the 7% sequential increase of assets in fee-based accounts.
What the Zacks Model Unveils
According to our proven model, the chances of Raymond James beating the Zacks Consensus Estimate this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Raymond James is +1.38%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Other Finance Stocks Worth a Look
Here are a couple of other finance stocks that you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this time:
The Earnings ESP for Capital One Financial (COF - Free Report) is +1.16%. The stock carries a Zacks Rank #3 at present. The company is slated to report second-quarter 2024 results on Jul 23.
Over the past seven days, the Zacks Consensus Estimate for COF’s quarterly earnings has moved 9% north to $3.28 per share.
Ameriprise Financial (AMP - Free Report) is scheduled to release quarterly numbers on Jul 24. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +0.77%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMP’s quarterly earnings estimates have been revised marginally lower to $8.51 per share over the past month.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.