On Oct 7, we upgraded our recommendation on
Raymond James Financial, Inc.
) to Neutral based on its steady balance sheet position, which
supports the company's efficient capital deployment activities.
E TRADE FINL CP (ETFC): Free Stock Analysis
GAIN CAP HLDGS (GCAP): Free Stock Analysis
INTERACTIVE BRK (IBKR): Free Stock Analysis
RAYMOND JAS FIN (RJF): Free Stock Analysis
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Raymond James is an attractive pick for yield-seeking investors.
It has a track record of continually raising the dividend over
the last decade. Moreover, given the acquisition and investment
opportunities amid a protracted economic recovery, Raymond James
remains focused on its inorganic growth strategy. Going forward,
we expect it to pursue more acquisitions that will increase both
its market share and revenues.
Further, Raymond James is well positioned from the capital
perspective due to its earnings power. We expect the company to
continue building capital over the next couple of years in order
to meet the heightened regulatory capital requirements.
On Jul 24, Raymond James announced fiscal third-quarter (ended
Jun 30) earnings of 65 cents, which was in line with the Zacks
Consensus Estimate but a penny above the prior-year quarter
figure. Results on a year-over-year basis benefited from a
rise in revenues, partially offset by higher expenses. Growth in
AUM as well as assets under administration were the other
However, over the past 60 days, the Zacks Consensus Estimate for
fiscal 2013 declined 1.5% to $2.64 per share. Further, for fiscal
2014, the Zacks Consensus Estimate decreased 1.6% to $3.10 over
the same period. Therefore, Raymond James currently carries a
Zacks Rank #4 (Sell).
Moreover, a rise in operating expenses remains a major concern
for Raymond James. As a result of the company's acquisitions,
expenses will likely increase further and consequently exert
greater pressure on the bottom line. A still low interest rate
environment, regulatory issues and sluggish economic recovery are
expected to weigh on the company's profitability in the near
Other Stocks to Consider
Better-performing financial institutions include
GAIN Capital Holdings, Inc.
Interactive Brokers Group, Inc.
). While GAIN Capital Holdings carries a Zacks Rank #1 (Strong
Buy), both E*TRADE Financial Corporation and Interactive Brokers
Group have a Zacks Rank #2 (Buy).