Raymond James Financial Inc.
) reported second-quarter fiscal 2014 earnings per share of 72
cents, which missed the Zacks Consensus Estimate of 78 cents.
However, the reported figure was significantly higher than 56
cents earned in the prior-year quarter.
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Results came in lower than expected mainly due to rise in
non-interest expenses, partly offset by higher revenues. Rise in
assets under management (AUM) and client assets under
administration were among the positives.
Non-GAAP net income came in at $104.6 million, up 8% year over
GAAP net income for the quarter was $104.6 million or 72 cents
per share, compared with $80.0 million or 56 cents per share in
the year-ago quarter.
Behind the Headlines
Raymond James' total revenue for the quarter came in at $1.2
billion, up 3% year over year. The rise was mainly attributable
to increase in securities commissions and fees, investment
banking, investment advisory, account and service fees as well as
net trading profit. However, these positives were partly offset
by a fall in revenues generated from other items. The reported
figure was in line with the Zacks Consensus Estimate.
Non-interest expenses rose 4% year over year to $1.0
billion primarily due to increase in compensation and
benefits expenses, communication and information processing,
business development costs and investment sub-advisory fees.
These were partly offset by a fall in bank loan loss provision
and decreases in clearance and floor brokerage costs. Raymond
James did not incur any acquisition-related expenses in the
reported quarter as compared with $20.9 million in the year-ago
As of Mar 31, 2014, client assets under administration rose 12.6%
to $458.1 billion while AUM climbed 22.2% to $62.3 billion, both
on a year-over-year basis.
As of Mar 31, 2014, Raymond James reported total assets of $22.9
billion, up 0.9% from the prior-year quarter. Shareholders'
equity came in at $3.9 billion, increasing 12.0% year over year.
Book value per share as of Mar 31, 2014 was $27.75, up from
$25.14 as of Mar 31, 2013.
Raymond James' strong balance sheet and continued efforts to
boost segmental performance will expectedly strengthen its
financials going forward. Moreover, the company's capital
strength and synergies from acquisitions are likely to be
accretive to earnings. However, we believe that the company needs
to control expenses more aggressively.
Additionally, regulatory issues, a low interest-rate environment
and sluggish economy remain matters of concern.
At present, Raymond James carries a Zacks Rank #2 (Buy)
Performance of Other Investment Brokerage Firms
) first-quarter 2014 earnings of 24 cents per share beat the
Zacks Consensus Estimate of 22 cents. Results benefited from
higher revenues and prudent expense management, partially offset
by decline in benefit from provisions.
Interactive Brokers Group, Inc.
) reported first-quarter 2014 adjusted earnings per share of 34
cents, which surpassed the Zacks Consensus Estimate of 29 cents.
Results benefited mainly from revenue growth, robust credit
quality and additional capital strength, partially offset by a
slight rise in expenses.
) reported second-quarter fiscal 2014 earnings of 35 cents per
share, which beat the Zacks Consensus Estimate by a penny.
Results were primarily driven by solid top-line growth.