Raymond James Financial Inc.
) fiscal fourth quarter 2012 (ended September 30) earnings per
share came in at 69 cents, beating the Zacks Consensus Estimate
of 63 cents. Moreover, this substantially exceeded the prior-year
quarter earnings of 52 cents.
RAYMOND JAS FIN (RJF): Free Stock Analysis
SCHWAB(CHAS) (SCHW): Free Stock Analysis
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For the fiscal year 2012, earnings per share came in at $2.51,
beating the Zacks Consensus Estimate of $2.47. Moreover, this
surpassed the earnings of $2.39 in the previous year.
Better-than-expected results were the outcome of an improved top
line. Also, improvements in assets under management (AUM) and
assets under administration were the positives for the quarter.
However, higher expenses were the downside.
GAAP net income for the reported quarter came in at $83.3 million
or 60 cents per share, compared with $68.9 million or 54 cents
per share in the prior-year quarter.
Behind the Headlines
Raymond James' total revenue in fiscal fourth-quarter came in at
$1,093.5 million, up 31% year over year. The elevation was
largely driven by improvements in net trading profits, securities
commissions and fees, interest income as well as other revenues,
partially offset by a decline in investment banking revenues.
This compared favorably with the Zacks Consensus Estimate of
Moreover, total revenues for the fiscal year 2012 were recorded
at $3.9 billion, up 15% from $3.4 billion in fiscal year 2011.
This also compares favorably with the Zacks Consensus Estimate of
Non-interest expenses surged 36% from the prior-year quarter to
$948.2 million. The hike was primarily attributable to elevated
compensation and benefits expenses, occupancy and equipment
costs, clearance and floor brokerage costs as well as business
development expenses. These negatives were partially offset by a
decline in bank loan loss provision.
As of September 30, 2012, assets under administration spiked 53%
year over year to $390.3 billion. Similarly, AUM totaled $42.8
billion, expanding 33% from the year-ago quarter.
As of September 30, 2012, Raymond James reported total assets of
$21.2 billion and shareholders' equity of $3.3 billion compared
with $18.0 billion and $2.6 billion, respectively, in the
prior-year quarter. Book value per share at the end of the fiscal
fourth quarter was $24.02 compared with $20.99 in the prior-year
Raymond James' peer,
The Charles Schwab Corporation
) reported its third quarter 2012 earnings on October 15. The
earnings came in at 19 cents per share, marginally beating the
Zacks Consensus Estimate of 17 cents. Also, this compared
favorably with the year-ago quarter's earnings of 18 cents. The
results in the reported quarter included a non-recurring state
tax benefit of about $20 million.
Improved asset management and administration fees as well as
balance sheet restructuring actions were the positives for the
quarter. Yet, higher operating expenses and provision for loan
losses as well as a fall in net interest income and trading
revenue partially dented the results.
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 increasing expenses will likely put the company's
profitability under pressure.
Currently, Raymond James retains a Zacks #2 Rank, which
translates into a short-term Buy rating. However, considering the
fundamentals, we maintain a long-term 'Neutral' recommendation on