HomeMost PopularInvestingWhat's in Store for Raymond James (RJF) in Q2 Earnings?

What’s in Store for Raymond James (RJF) in Q2 Earnings?

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Raymond James RJF is scheduled to announce second-quarter fiscal 2024 (ended Mar 31) results on Apr 24, after market close. Quarterly earnings and revenues are expected to have witnessed a rise on a year-over-year basis.

In the last reported quarter, RJF’s earnings beat the Zacks Consensus Estimate. 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. However, the company recorded bank loan provision for credit losses during the quarter. Also, expenses increased in the quarter, which hurt the results to some extent.

Raymond James doesn’t have a decent 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 and EPS Surprise

Raymond James Financial, Inc. price-eps-surprise | Raymond James Financial, Inc. Quote

The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at $2.28, which has moved 7.7% north over the past 30 days. The figure indicates growth of 12.3% from the year-ago quarter.

The consensus estimate for sales of $3.1 billion suggests 7.9% year-over-year growth.

Major Factors at Play

IB Fees: Following weakness in 2022 and 2023, global mergers and acquisitions bounced back in the to-be-reported quarter. Both deal value and volumes witnessed a noteworthy comeback driven by solid financial performance, fading recession risks, buoyant markets and expected rate cuts later this year. Yet, tough scrutiny by antitrust regulators and lingering geopolitical tensions continued to be 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 the 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 $181.7 million, suggesting an 18% jump on a year-over-year basis. We anticipate IB fees of $168.5 million.

Trading Revenues: Client activity was decent in the quarter. The expectations of a soft landing of the U.S. economy, a gradually cooling inflation and clarity on the Fed rate path 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 March-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 $1.03 billion, indicating a rise of 13%. Our estimate for the metric is the same as the consensus number.

Expenses: Raymond James consistently hires advisors and invests in franchises. Thus, overall expenses are expected to have risen in the quarter. Also, due to a highly competitive environment, costs might have been elevated.

We project total non-interest expenses to be $2.44 billion, implying a 5.2% year-over-year increase.

Management’s Q2 Expectations

The company expects combined NII and RJBDP fees from third-party banks to decline 5% sequentially.

The Private Client Group segment results are expected to be favorably impacted by the 9% sequential increase of assets in fee-based accounts.

What the Zacks Model Reveals

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 Zacks Rank #3 (Hold) or higher.

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 +1.34%.

Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).

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 Invesco IVZ is +0.24% and it carries a Zacks Rank #2 at present. The company is slated to report first-quarter 2024 results on Apr 23.

Over the past seven days, the Zacks Consensus Estimate for IVZ’s quarterly earnings has moved 5.3% north to 40 cents per share.

SEI Investments SEIC is scheduled to release quarterly numbers on Apr 24. The company, which sports a Zacks Rank #1 (Strong Buy) at present, has an Earnings ESP of +2.50%. You can see the complete list of today’s Zacks #1 Rank stocks here.

SEIC’s quarterly earnings estimates have been revised 1% upward to 97 cents over the past month.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Invesco Ltd. (IVZ) : Free Stock Analysis Report

Raymond James Financial, Inc. (RJF) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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