Raymond James Financial, Inc. (NYSE:RJF) continues to be one of the best-run diversified financial services company with a conservative management philosophy and a solid business model. The company has grown meaningfully over the years and currently, with 6,800 financial advisors, serves over 2.8 million client accounts in locations across the United States, Canada and overseas.
With client assets of around $548 billion, this St. Petersburg, FL-based company’s strength can be seen in multiple areas including consistent top-line growth, improving earnings performance, and a strong capital and liquidity profile.
Notably, shares of Raymond James gained more than 25% over the past six months, compared with the 11% increase in the KBW Nasdaq Bank Index.
RAYMOND JAS FIN Price
Several issues including a competitive business environment, escalating costs and stricter regulations pose near-term concerns for Raymond James. In spite of these negatives, this Zacks Rank #2 (Buy) stock, seems like an attractive investment opportunity right now.
Why is the Stock an Attractive Pick?
Synergies from Acquisitions: Raymond James’ growth has been reflected in the company’s accomplishment of several acquisitions over the last few years. In Jun 2016, the company announced the acquisition of Germany-based Mummert & Company Corporate Finance GmbH in a bid to expand its investment banking activities in Europe. Further in May 2016, Raymond James inked a deal to acquire MacDougall, MacDougall & MacTier Inc. (also known as 3Macs), an independent Canadian investment firm while last December, it entered an agreement to acquire the U.S. Private Client Services Unit of Deutsche Bank (DE:DBKGn). Raymond James should continue to benefit from such prudent acquisitions.
Earnings per Share Strength: Raymond James’ earnings per share have recorded a CAGR of 12% over the last five years (2011–2015). Earnings are expected to exhibit an upswing in the near term as the company’s projected EPS growth (F1/F0) is 2.33% compared to the industry average rate of negative 0.92%.
Solid Return on Equity (ROE): With an ROE of 10.3% compared to the industry average of 8.5%, Raymond James appears to reinvest its cash more efficiently.
Valuation Looks Reasonable: Raymond James has a Value Style Score of ‘B’. The Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of ‘A’ or ‘B’ when combined with Zacks Rank #1 (Strong Buy) or #2 offer the best upside potential.
Stocks to Consider
Some top-ranked stocks in the finance space include Meta Financial Group, Inc. (NASDAQ:CASH) , Enterprise Financial Services Corp. (NASDAQ:EFSC) and Regional Management Corp. (NYSE:RM) , each sporting a Zacks Rank #1 (Strong Buy).
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
ENTERPRISE FINL (EFSC): Free Stock Analysis Report
RAYMOND JAS FIN (RJF): Free Stock Analysis Report
META FINL GRP (CASH): Free Stock Analysis Report
REGIONAL MANAGE (RM): Free Stock Analysis Report
Original post
Zacks Investment Research