What happened
Raymond James Financial (RJF +0.52%) was a big winner in 2021 as its stock rose 57.4%, according to data provided by S&P Global Market Intelligence, double the S&P 500's return of 27% during the same time.
The financial services firm saw record revenue and profit during the year, posting stellar client assets growth while also benefiting from hot markets for mergers and acquisition activity.
Image source: Getty Images.
So what
2021 was a solid year for Raymond James Financial, which saw revenue grow 22% and net income grow 72% during its fiscal year, which ended Sept. 30, 2021.
The financial services firm generates much of its revenue from its private client group segment -- where it provides financial planning, investment advice, and securities transaction services. The firm saw assets under administration grow 27% from the year before to $1.18 trillion as it saw a high retention of advisors while also recruiting new advisors at a record pace. Thanks to the growth in its assets, its privet client group segment grew revenue 19% from the year before.
However, that wasn't the only thing Raymond James did well in 2021. Last year was a record year for companies when it came to investment banking activity, which saw global merger and acquisition (M&A) activity crushing records, topping $5 trillion globally. Thanks to a strong backdrop of equity and debt underwriting activity, the company's capital markets segment posted impressive revenue growth of 46%.
The solid results for Raymond James Financial in 2021 are a testament to the business and its diverse revenue streams. Despite interest rates remaining near record-low levels, impacting Raymond James' banking unit, it was able to more than offset any impacts thanks to strong levels of investment management fees and M&A and other fees.
Now what
Going into 2022, management for the firm looks for the trend of advisor recruitment to remain strong and for assets to continue to grow. It also sees a robust pipeline for its investment banking activities.
The bank could benefit if the Federal Reserve begins raising interest rates in 2022, which it has signaled it may start doing as soon as March. Because of Raymond James' diverse revenue sources, rising interest rates could help margins improve even if capital markets were to slow down during the year.
The company has been a solid performer for years now, too, growing its revenue 10.6% compounded annually from 2010 through 2020 while seeing its clients' assets under administration growing 14.1% annually during that same time. With the stock trading at 12.7 times estimated forward earnings, it looks like a solid value stock that investors can hold for the long haul.
