Raymond James (RJF) Q2 Earnings Top, Revenues Meet, Costs Up

Raymond James RJF announced second-quarter fiscal 2019 (ended Mar 31) earnings per share of $1.81, which handily outpaced the Zacks Consensus Estimate of $1.67. Also, on a year-over-year basis, it increased 11%.

Results benefited from improvement in net revenues, reflecting strong investment banking performance and higher interest rates. Further, client assets improved. However, rise in operating expenses was on the downside.

Net income totaled $261 million, up 7% year over year.

Revenues & Costs Rise

Net revenues amounted to $1.86 billion, growing 3% year over year. The rise was largely attributable to an increase in almost all the revenue components except total brokerage revenues. Also, the top line matched the Zacks Consensus Estimate.

Segment wise, in the reported quarter, RJ Bank registered an increase of 18% in net revenues. Capital Markets witnessed a rise of 20% in the top line, while Private Client Group recorded in line net revenues. On the other hand, Asset Management witnessed a 1% fall in top line and Others did not record any revenues.

Non-interest expenses were up 3% year over year to $1.52 billion. The increase was mainly due to rise in almost all cost components.

As of Mar 31, 2019, client assets under administration grew 9%from the prior-year quarter to $796 billion. Further, financial assets under management increased 5% to $138.5 billion.

Balance Sheet Strong, Capital Ratios Improve

As of Mar 31, 2019, Raymond James reported total assets of $38.2 billion, down nearly 1% sequentially. Total equity increased4% from the prior quarter to $6.4 billion.

Book value per share was $45.35, up from $40.82 as of Mar 31, 2018.

As of Mar 31, 2019, total capital ratio came in at 25.3%, increasing from 24.3% as on Mar 31, 2018. Also, Tier 1 capital ratio was 24.3% compared with 23.3% as of March 2018 end.

Return on equity was 16.7% at the end of the reported quarter, on par with the prior-year quarter level.

Share Repurchase Update

During the reported quarter, Raymond James repurchased nearly 0.6 million shares for $47 million.

Our Take

Raymond James remains well positioned to grow via acquisitions, given its strong liquidity position. However, mounting expenses are likely to continue hurting bottom-line growth.

Raymond James Financial, Inc. Price, Consensus and EPS Surprise

 

Raymond James Financial, Inc. Price, Consensus and EPS Surprise | Raymond James Financial, Inc. Quote

Currently, the company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of Other Investment Brokerage Firms

Charles Schwab’s SCHW first-quarter 2019 earnings of 69 cents per share surpassed the Zacks Consensus Estimate of 66 cents. Also, earnings increased 25% from the prior-year quarter.

Interactive Brokers Group, Inc.’s IBKR first-quarter 2019 earnings per share of 64 cents surpassed the Zacks Consensus Estimate of 43 cents. Moreover, the figure compared favorably with the prior-year quarter’s earnings of 63 cents.

E*TRADE Financial ETFC delivered a positive earnings surprise of 16% in first-quarter 2019. Earnings of $1.09 per share comfortably surpassed the Zacks Consensus Estimate of 94 cents. Moreover, the results compared favorably with 88 cents recorded in the prior-year quarter.

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