Raymond James (RJF) Q2 Earnings: What To Expect This Time?

Raymond James Financial, Inc. (NYSE:RJF) is scheduled to announce second-quarter fiscal 2017 (ended Mar 31) results on Apr 26, after the market closes.

Last quarter, the company’s earnings beat the Zacks Consensus Estimate reflecting an increase in the top line. This was partially offset by elevated expenses.

The earnings beat translated into improved price performance, with the shares of Raymond James jumping 9.4% over the first three months of 2017. Also, analysts seem to be happy with the company’s business activities in the just concluded quarter, as evident from nearly 1% rise in earnings estimates over the last 30 days.

Further, Raymond James’ fiscal second-quarter earnings estimates of $1.11 reflect a jump of 22.8% on a year-over-year basis. Also, the stock has a decent earnings surprise history, as evident from the chart below:

Factors to Influence Q2 Results

Underwriting Fees Should have Risen: Driven by an improving operating environment and economic stability, the first three months of 2017 witnessed a rise in demand for debt and recorded a rise in equity issuance.

Per the data compiled by Thomson Reuters, bond market activities led to more than 16% increase in underwriting fees. Likewise the data indicates that global fees related to equity capital markets activity roughly totaled $5.1 billion, up over 90% year over year.

Thus, Raymond James must have benefited from this upbeat trend and should report a rise in underwriting fees in to-be-reported quarter.

Advisory Fee Revenues Might have Declined: In the face of uncertainty related to policy matters and political changes, global deal making seems to have remained steady. This is reflected by more than 6% rise in global deal value, according to the Thomson Reuters data.

Despite this favorable data, overall fees earned through deal making are projected to have declined. Similarly, Raymond James is expected record a fall in advisory fees during the quarter.

Loan Growth in RJ Bank to Support Revenues: With stabilizing economy, a rise in demand for loans and improvement in rates, RJ Bank segment must report a rise in interest income.

Expenses to Increase: Management projects communication information processing expense to be in the range of $75–$80 million, up from the prior quarter. Also, the company expects to incur additional $5–$10 million of integration costs during the quarter. Further, as the company continues to invest in franchises and grow through acquisitions, expenses should increase in the quarter.

Earnings Whispers

Our proven model does not conclusively show that Raymond James is likely to beat earnings this quarter. That’s because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as elaborated below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: The Earnings ESP for Raymond James is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.11.

Zacks Rank: Raymond James has a Zacks Rank #2, which increases the predictive power of ESP. However, we need a positive ESP to be confident of an earnings surprise.

Stocks to Consider

Here are a few finance stocks that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Prosperity Bancshares, Inc. (NYSE:PB) has an Earnings ESP of +1.02% and it carries a Zacks Rank #3. The company is slated to release results on Apr 26.

SVB Financial Group (NASDAQ:SIVB) is scheduled to announce results on Apr 27. The company has an Earnings ESP of +0.54% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Waddell & Reed Financial, Inc. (NYSE:WDR) has an Earnings ESP of +2.50% and a Zacks Rank #3. It is scheduled to report results on May 2.

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