Raymond James Financial, Inc. (RJF): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


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Raymond James' fourth-quarter (ended Sep 30) fiscal 2014 earnings outpaced the Zacks Consensus Estimate. Robust top-line improvement along with growth in assets under management (AUM) and assets under administration were among the positives. However, rising expenses remained a headwind. Going forward, we believe that the company's capital strength, sturdy growth in the PCG segment and synergies from the acquisitions are expected to be accretive to its financials. Further, the company's steady capital deployment activities continue to be a positive attribute for investors. Nonetheless, weak cost control, increasing regulatory pressure and slow economic recovery continue to weigh on profitability.


Established in 1962, Raymond James Financial Inc. is a diversified company based in St. Petersburg, FL. The company became public in 1983 and along with its subsidiaries Raymond James & Associates Inc. (RJ&A), Raymond James Financial Services Inc. (RJFS), Raymond James Financial Services Advisors Inc. (RJFSA), Raymond James Ltd. (RJ Ltd.), Eagle Asset Management Inc. (Eagle) and Raymond James Bank N.A. (RJ Bank) it provides financial services mainly in the U.S. and Canada.

The financial services offered by Raymond James include underwriting, distribution, trading and brokerage of equity and debt securities, and sale of mutual funds and other investment products. Apart from these, the company provides investment management services, corporate and retail banking and trust services.

In 2012, Raymond James became a bank holding company and a financial holding company. Concurrently, RJ Bank was converted to a national bank following the approval from the Office of the Comptroller of the Currency.

Raymond James operates its businesses through the following segments:

The Private Client Group (PCG) segment offers a broad range of investments and services, including both third-party and proprietary products as well as a wide range of financial planning services. The segment provides services through the branch office systems of RJ&A, RJFS, RJFSA, RJ Ltd. and Raymond James Investment Services Limited (RJIS), a UK-based joint venture (JV).

The Capital Markets segment mainly offers equity and fixed income products and services, with institutional sales commissions accounting for a large portion of its revenues.

The Asset Management segment provides asset management services to individual investment portfolios and mutual funds. The segment includes the operations of Eagle, the Eagle Family of Funds (Eagle Funds), and asset management operations of RJ&A (AMS), Raymond James Trust along with other fee-based programs.

The RJ Bank provides corporate, residential and consumer loans as well as FDIC insured deposit accounts to Raymond James' broker-dealer subsidiaries and the general public. RJ Bank is also active in corporate loan syndications as well as buying residential whole-loan packages to hold for investment.

The Other segment consists of principal capital and private equity activities as well as various corporate overhead costs, which include interest expense on senior debt, acquisition and integration related expenses as well as losses associated with the securities repurchased.

In 2011, Raymond James completed the acquisition of Howe Barnes, fulfilling its plan of expanding the presence of its capital markets and private clients in strategic areas.

In Apr 2012, Raymond James completed the acquisition of Morgan Keegan & Company Inc. and MK Holding Inc. and certain of its related affiliates from Regions Financial Corporation for about $1.2 billion. In Dec 2012, Raymond James completed the acquisition of 45% stake in ClariVest Asset Management, LLC for $8.8 million.

As of Sep 30, 2014, Raymond James had total assets of $23.3 billion and shareholders' equity of $4.1 billion. The company's fiscal year ends on Sep 30.

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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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