Raymond James Financial Inc
) fiscal first-quarter 2013 (ended Dec 31) earnings per share
came in at 69 cents, beating the Zacks Consensus Estimate by a
penny. Moreover, this substantially exceeded the year-ago
earnings of 53 cents.
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Better-than-expected results were driven by an improved top line.
In addition, growth in assets under management (AUM) and assets
under administration were the positives. However, higher expenses
remain a cause of concern.
GAAP net income for the reported quarter came in at $85.9 million
or 61 cents per share, compared with $67.3 million or 53 cents
per share in the prior-year quarter.
Behind the Headlines
Raymond James' total revenue in the quarter came in at $1,137.5
million, surging 42.4% year over year. The elevation was largely
driven by improvements in securities commissions and fees,
investment banking revenues, investment advisory fees, interest
income, account and service fees as well as other revenues,
partially offset by a decline in net trading profits. This
surpassed the Zacks Consensus Estimate of $1,089.0 million by
Non-interest expenses augmented 42% from the prior-year quarter
to $962.3 million. The hike was primarily attributable to
elevated compensation and benefits expenses, communications and
information processing, occupancy and equipment costs, clearance
and floor brokerage costs as well as business development
expenses along with investment sub-advisory fees and other
expenses. Lower bank loan loss provision proved as a slightly
As of Dec 31, 2012, assets under administration spiked 45.4% year
over year to $392.0 billion. Similarly, AUM totaled $46.5
billion, expanding 33.2% from the year-ago quarter.
As of Dec 31, 2012, Raymond James reported total assets of $22.3
billion, up 24.6% year over year. Shareholders' equity came in at
$3.4 billion, increasing 28.2% from $2.6 billion in the
prior-year quarter. Book value per share at the end of the fiscal
first quarter was $24.59 compared with $21.34 in the prior-year
Quarterly Results of Other Asset Managers
The Charles Schwab Corporation
) reported its fourth-quarter 2012 earnings in line with the
Zacks Consensus Estimate. Overall, growth in the top line, lower
provision for loan losses and balance sheet restructuring actions
were the positives. Yet, higher operating expenses as well as a
fall in trading revenue dented the results.
Further, on Jan 22,
TD Ameritrade Holding Corporation
) reported its fiscal first quarter 2013 (ended Dec 31, 2012) net
income, which marginally surpassing the Zacks Consensus Estimate.
Better-than-expected results for the quarter reflected a decline
in operating expenses. Further, an increase in total client
assets was a positive. However, decreases in total daily average
revenue trades (DARTs) and revenue were the downsides.
However, on Jan 15,
Interactive Brokers Group Inc.
) reported a lower than expected fourth-quarter earnings The
quarterly results marginally lagged owing to a drop in its top
line, partially offset by slight decline in operating expenses.
Amidst the slowly recovering market, Raymond James' solid balance
sheet and its efforts to boost revenue by recruiting experienced
advisors are expected to be accretive to its financials in the
upcoming quarters. Moreover, the company's capital strength and
capital deployment activities should make its stock attractive to
On the other hand, the regulatory issues, a low-interest rate
environment and continuously rising expenses will likely put the
company's profitability under pressure.
Currently, Raymond James retains a Zacks Rank #3 (Hold).