Solid Trading & IB Performance to Support RJF's Q4 Earnings

Raymond James RJF is scheduled to announce fourth-quarter fiscal 2025 (ended Sept. 30) results on Oct. 22, after market close. While the company’s earnings are expected to have declined on a year-over-year basis, revenues are likely to have witnessed a rise.

In the last reported quarter, RJF’s earnings missed the Zacks Consensus Estimate. Results were adversely impacted by a $58-million reserve increase related to the settlement of a legal matter over bond underwritings for a specific issuer, sold to institutional investors between 2013 and 2015. Higher expenses and provisions were other negatives.

Raymond James does not have an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in only two of the trailing four quarters, the average beat being 4.8%.

Raymond James Financial, Inc. Price and EPS Surprise

 

Raymond James Financial, Inc. price-eps-surprise | Raymond James Financial, Inc. Quote

The Zacks Consensus Estimate for the company’s fiscal fourth-quarter earnings is pegged at $2.70, which has been unchanged over the past seven days. The figure indicates a decline of 8.5% from the year-ago quarter.

The consensus estimate for sales of $3.60 billion suggests 4% year-over-year growth.

Management expects fiscal fourth-quarter asset management and related administrative fees to be rise 9% sequentially, driven by higher PCG assets and fee-based accounts at quarter end and one more business day during the quarter.

Major Factors at Play for Raymond James’ Q4 Earnings

IB Fees: Global mergers and acquisitions (M&As) in the September-ended quarter rebounded solidly from the lows witnessed in April and May following President Trump’s announcement of ‘Liberation Day’ tariff plans. As corporates adapted to the rapidly changing geopolitical and macroeconomic scenarios, M&A deals resumed. Thus, Raymond James’ advisory fees are expected to have been positively impacted.

The IPO market performance was impressive, with an increase in the number of IPOs and the amount of capital raised, driven by strategic tariff pauses and positive economic data. Also, global bond issuance volume was decent. Thus, RJF’s underwriting fees are expected to have been positively impacted.

The consensus estimate for RJF’s IB fees is pegged at $258 million, implying an 18.1% decline on a year-over-year basis. We anticipate IB fees to be $265.6 million.

Trading Revenues: Client activity and market volatility were strong in the quarter. The uncertainty over the impacts of tariffs on the U.S. economy and changes in the Fed’s monetary policy drove client activity. Volatility was high in equity markets and other asset classes, including commodities, bonds and foreign exchange. Thus, Raymond James’ trading revenues are likely to have witnessed solid growth.

Net Interest Income (NII):  The Federal Reserve lowered interest rates by 25 basis points to 4.00-4.25%. However, this is less likely to have hurt RJF’s NII to a great extent as the rate cut occurred toward the end of the to-be-reported quarter. With rates remaining relatively unchanged for most of the quarter, funding/deposit costs are expected to have been stable. Also, the overall lending scenario was impressive. Thus, RJF’s NII is expected to have been favorably impacted.

The Zacks Consensus Estimate for interest income is pegged at $991 million, indicating a year-over-year decline of 7.6%. Our estimate for the metric is $1 billion.

Management expects aggregate NII and Raymond James Bank Deposit Program third-party fees to decline 2% in the fourth quarter.

Expenses: Raymond James consistently hires advisors and invests in franchises. Thus, overall expenses are expected to have increased in the to-be-reported quarter. Due to a highly competitive environment and inflationary pressure, expenses are likely to have risen.

We project total non-interest expenses to be $2.85 billion, implying a 5.4% year-over-year increase.

What the Zacks Model Unveils for Raymond James

According to our proven model, the chances of RJF beating the Zacks Consensus Estimate this time are high. This is because it has the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Raymond James is +2.00%.

Zacks Rank: The company currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Finance Stocks Worth Considering

Here are a couple of other finance stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around.

Moody's Corporation MCO is scheduled to report quarterly results on Oct. 22. The company has an Earnings ESP of +3.39% and a Zacks Rank #2 (Buy).

Over the past seven days, the Zacks Consensus Estimate for Moodys’ quarterly earnings has been revised 1.1% higher to $3.65.

The Earnings ESP for Prosperity Bancshares PB is +0.52% and it carries a Zacks Rank #3. The company is slated to report third-quarter 2025 results on Oct. 29.

Over the past seven days, the Zacks Consensus Estimate for Prosperity Bancshares’ quarterly earnings has been unchanged at $1.45.

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This article originally published on Zacks Investment Research (zacks.com).

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