Raymond James Financial, Inc. (NYSE:RJF) headlining after earnings

Raymond James Financial, Inc. (NYSE:RJF) reported earnings for the three months ended Mar2016 on April 20, 2016. The company earned $0.9 per share on revenue of $1.31B. Analysts had been modeling earning per share of $0.75 with $1.29B in revenue.

Raymond James Financial, Inc. (NYSE:RJF) reported quarterly net revenues of $1.31 billion and quarterly net income of $125.8 million, or $0.87 per diluted share, for the fiscal second quarter ended March 31, 2016. Excluding $6 million of expenses associated with the announced acquisition of the US Private Client Services unit of Deutsche Bank Wealth Management, adjusted net income for the quarter was $129.7 million, or $0.90 per diluted share, on a non-GAAP basis.

RAYMOND JAMES FINANCIAL REPORTS 2ND QUARTER FISCAL 2016 RESULTS

• Quarterly net income of $125.8 million, or $0.87 per diluted share, and adjusted net income of $129.7 million, or $0.90 per diluted share, on a non-GAAP basis⁽¹⁾


• Record client assets under administration of $513.7 billion


• Record Private Client Group financial advisors of 6,765, increases of 381 over March 2015 and 78 over December 2015


• Record quarterly net revenues and pre-tax income for Raymond James Bank

Despite the continued volatility of equity markets during the quarter, net revenues grew 2 percent over the prior year’s fiscal second quarter and 3 percent over the preceding quarter. Adjusted net income in the quarter of $129.7 million⁽¹⁾ represents substantial increases of 14 percent over the prior year’s fiscal second quarter and 21 percent over the preceding quarter. The growth in revenues and earnings during the quarter was primarily attributable to the rise in short-term interest rates in December 2015, which magnified the favorable impact derived from the continued growth of Raymond James Bank’s loan portfolio and client cash balances in the Private Client Group. Additionally, earnings growth during the quarter was aided by the disciplined management of discretionary expenses.

For the first six months of the fiscal year, net revenues of $2.59 billion increased 2 percent over fiscal 2015 and represented a record start to a fiscal year. During the same period, adjusted net income of $237.2 million⁽¹⁾ declined 1 percent compared to fiscal 2015, driven largely by increased investments in technology as well as higher loan loss provisions at Raymond James Bank.

Segment Results

Private Client Group

• Quarterly net revenues of $880.3 million, up 1 percent compared to both the prior year’s fiscal second quarter and the preceding quarter


• Quarterly pre-tax income of $83.2 million, up 10 percent compared to the prior year’s fiscal second quarter and 20 percent compared to the preceding quarter


• Record Private Client Group assets under administration of $485.6 billion, up 3 percent compared to both March 2015 and December 2015


• Record Private Client Group financial advisors of 6,765, increases of 381 over March 2015 and 78 over December 2015

Revenues in the segment benefited from beginning the quarter with higher assets in fee-based accounts as well as an increase in account and service fees, as higher short-term interest rates contributed to a rise in fees from client cash balances in the Raymond James Bank Deposit Program. However, revenue growth from these favorable items was partially offset by lower commission revenues from mutual funds and equities during the quarter. Nonetheless, expense control measures helped the segment’s pre-tax income increase 10 percent over last year’s fiscal second quarter and 20 percent over the preceding quarter, which was negatively impacted by elevated reserves related to legal and regulatory matters.

Assets in fee-based accounts of $196.1 billion increased 8 percent compared to March 2015 and 3 percent compared to December 2015, representing over 40 percent of the segment’s client assets at the end of the quarter. As assets in fee-based accounts are billed based on balances at the beginning of the quarter, the 3 percent increase during the quarter will be reflected in revenues in the fiscal third quarter.

Raymond James Financial, Inc. earnings per share showed an increasing trend of 3.2% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 413%.Analysts project EPS growth over the next 5 years at 11.55%. It has EPS annual growth over the past 5 fiscal years of 13.4% when sales grew 12.2. It reported -48.3% sales drop, and -46.7% EPS decline in the last quarter.

The stock is trading at $56.07, up 41.33% from 52-week low of $39.84. The stock trades down -8.27% from its peak of $61.82 and 7.45% above the consensus price target of $60.25. Its volume clocked up at 1.47 million shares which is higher than the average volume of 0.87 million shares. Its market capitalization currently stands at $7.84B.