What happened
The share price of Raymond James Financial (RJF +0.01%) jumped 18.4% this week, climbing to $119 per share from last Friday's close through today's closing bell, according to S&P Global Market Intelligence. The stock has been one of the top performers on the market this year, up 18% year to date.
The financial services firm topped the major indexes, as the Dow Jones Industrial Average was up 5.7%, the S&P 500 climbed 3.9%, and the Nasdaq Composite gained 2.2% this week from last Friday's close.
So what
This is a big week for earnings, and while a lot of big tech companies disappointed, Raymond James did not. For its fiscal fourth quarter, the firm had record net revenue of $2.8 billion, up 5% year over year and 4% from the previous quarter. Revenue was buoyed by record net loans of $43 billion, up 73% year over year, and a 210% year-over-year jump in net interest income due to interest rate increases. Net interest margin increased 99 basis points from the third quarter of 2021 to 2.91%. It got a boost from the recent acquisition of TriState Capital Bank.
NYSE: RJF
Key Data Points
This helped offset year-over-year revenue declines in the asset management, brokerage, and investment management businesses.
Further, the company posted $2.03 earnings per share, down 2% year over year but up 44% from the previous quarter. The company beat revenue and earnings expectations.
As this was the fourth-quarter report, Raymond James also posted year-end numbers, which set records. Raymond James had record net revenue of $11 billion, up 13% from the prior fiscal year, and record annual earnings per diluted share of $6.98 -- up 5% from the previous fiscal year.
"Notwithstanding the challenging and volatile market environment during the fiscal year, we generated record results with annual net revenues and pre-tax income growth of 13%, which was driven by strong organic growth, particularly in the Private Client Group segment, the benefit of higher short-term interest rates and, most importantly, our advisors' and associates' unwavering focus on always putting their clients first," Raymond James Financial Chair and CEO Paul Reilly said in a statement.
Now what
Heading into its fiscal first quarter of 2023 and beyond, Raymond James will again rely on interest income and banking to generate revenue gains, as the outlook for the investment banking, brokerage, and asset management businesses will remain challenged by the murky macroeconomic outlook.
But with a relatively low price-to-earnings (P/E) ratio of 10, and a five-year P/E-to-growth (PEG) ratio of around 1, it is a pretty good value. And with recent strategic acquisitions, such as TriState Capital, and fixed income market maker SumRidge Partners, it continues to build out and diversify its capabilities so it can perform in any market environment -- as it has shown this year.
