Raymond James Financial, Inc.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 organically and through acquisitions. Further, the company's strength can be seen in multiple areas including consistent top-line growth, improving earnings performance, and a strong capital and liquidity profile.
However, several matters including a competitive business environment, escalating costs and stricter regulations pose near-term concerns for Raymond James. Despite these adverse factors, this Zacks Rank #1 (Strong Buy) stock seems like an attractive investment opportunity right now as it has been witnessing solid upward estimate revisions.
Also, shares of Raymond James increased 39.5% over the past six months, outperforming the Zacks categorized Investment Brokerage industry's gain of 36.1%.
Why is the Stock a Solid Pick?
Synergies from Acquisitions: Raymond James' growth has been reflected in several successful acquisitions over the last few years. Specifically, in calendar year 2016, the company completed the acquisitions of German-based Mummert & Company Corporate Finance GmbH, Canadian investment firm MacDougall, MacDougall & MacTier Inc. (also known as 3Macs) and the U.S. Private Client Services unit of Deutsche Asset & Wealth Management. These deals have significantly added to the company's profitability. Going forward, the company is well positioned for opportunistic deals given its strong liquidity position.
Earnings Per Share Growth: Over the past three to five years, Raymond James witnessed earnings per share (EPS) growth of 26.2% compared with 11.3% for the industry. Notably, the company has a strong earnings surprise history, having delivered positive surprises in all the trailing four quarters with an average beat of 14.78%.
Further, the company's earnings are projected to grow 16.8% in fiscal 2017, higher than 11.8% predicted for the industry. Also, the company's long-term (three to five years) estimated EPS growth rate of 17.0% promises rewards for investors in the long run.
Revenue Strength: Raymond James remains focused on enhancing revenue growth. Its strategy to grow inorganically is paying off well. Also, the company has been witnessing a rise in loan balances.
Further, the company's projected sales growth (F1/F0) of 14.9% (compared with nil growth for the industry) ensures continuation of the upward trend in revenues.
Solid Return on Equity (ROE): With an ROE of 10.60% compared to the industry average of 9.66%, Raymond James appears to reinvest its cash more efficiently.
Other Stocks Worth a Look
Some other favorably ranked stocks in the same industry include Evercore Partners Inc. EVR , LPL Financial Holdings Inc. LPLA and Yintech Investment Holdings Limited YIN . All three stocks sport a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .
Evercore Partners has witnessed an upward earnings estimate revision of 9.7% for the current year over the past 60 days. Also, its share price is up 18.8%, year to date.
LPL Financial earnings estimates have been revised upward by 13.1% for the current year in the past 60 days. Also so far this year, its share price increased 16.1%.
Yintech Investment recorded an upward earnings estimate revision of 23.2% for the current year in the past 60 days. Also, its share price has seen a 13.4% rise so far this year.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportRaymond James Financial, Inc. (RJF): Free Stock Analysis ReportEvercore Partners Inc (EVR): Free Stock Analysis ReportLPL Financial Holdings Inc. (LPLA): Free Stock Analysis ReportYintech Investment Holdings Limited (YIN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research