Raymond James (RJF) Beats Q3 Earnings On Improved Revenues
Zacks Investment Research | Jul 26, 2017 10:23PM ET
Raymond James Financial Inc. (NYSE:RJF) announced third-quarter fiscal 2017 (ended Jun 30) adjusted earnings per share of $1.26, which surpassed the Zacks Consensus Estimate of $1.24. Also, on a year-over-year basis, the bottom line surged 31%.
Results were primarily driven by a rise in net revenue, reflecting improved investment banking. Also, growth in assets acted as a tailwind. However, higher expenses were on the downside.
After taking into consideration several non-recurring items, net income totaled $183.4 million, up 46% from the year-ago quarter.
Revenues Improve, Costs Surge
Net revenue amounted to $1,624.5 million, improving 20% year over year. The rise was attributable to an increase in all the revenue components. However, a rise in interest expenses and lower net trading profit hurt revenues marginally. Further, the reported figure beat the Zacks Consensus Estimate of $1,616.0 million.
Segment wise, in the reported quarter, RJ Bank recorded a net revenue increase of 19%. Further, Capital Markets witnessed net revenue growth of 3% while Asset Management and Private Client Group depicted top-line improvement of 24% and 25%, respectively. However, Others reported negative revenues.
Non-interest expenses jumped 17% year over year to $1,347.6 million. The rise was largely due to increase in all cost components, except acquisition-related costs that plunged 75%.
As of Jun 30, 2017, client assets under administration increased 24% on a year-over-year basis to $664.4 billion while financial assets under management rose 27% to $91 billion.
Strong Balance Sheet & Ratios
As of Jun 30, 2017, Raymond James reported total assets of $33.4 billion, up 2% sequentially. Further, shareholders’ equity rose 4% on a sequential basis to $5.21 billion.
Book value per share was $37.46, up from $33.62 as of Jun 30, 2016.
As of Jun 30, 2017, total capital ratio came in at 23.3%, up from 22.3% as of Jun 30,, 2016. Also, Tier 1 capital ratio was 22.3% compared with 21.3% in the year-ago period.
Also, adjusted return on equity came in at 14.0% at the end of the reported quarter, up from 11.8% a year ago.
Our Take
Raymond James remains well positioned to grow via acquisitions, supported by a strong liquidity position. Further, loan growth coupled with improving economic environment will boost its top-line growth in the coming quarters.
Raymond James Financial, Inc. Price, Consensus and EPS Surprise
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