Raymond James Is Benefiting From Acquisitions and Interest Rates

Raymond James Financial recently completed several acquisitions, and results are starting to show the benefits of these acquisitions and interest rates. The company reported net income to common shareholders of $299 million, or $1.38 per diluted share, on $2.7 billion of net revenue for its fiscal third quarter. Net revenue increased 10% from the previous year and 2% sequentially, with the latter increase from interest-rate-related revenue streams. Operating margin decreased to 15.3%, from recent levels in the upper teens to a little over 20%, due to loan-loss provisioning and negative operating leverage in the capital markets segment. We are maintaining our $100 fair value estimate for no-moat Raymond James and assess the shares as fairly valued.