Why Raymond James Financial shares soared 18.4% this week

What happened

The share price of Raymond James Financial (RJF 4.63%) 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 best performers in the market this year, up 18% year-to-date.

The financial services company topped the major indexes, while the Dow Jones Industrial Average increased by 5.7%, the S&P500 climbed 3.9%, and the Nasdaq Compound gained 2.2% this week from last Friday’s close.

So what

It’s a big week for earnings, and while many big tech companies were disappointed, that wasn’t the case for Raymond James. For its fourth fiscal quarter, the company reported record net revenue of $2.8 billion, up 5% year-over-year and 4% from the prior quarter. Revenues were boosted by record net lending of $43 billion, up 73% year-over-year, and a 210% year-over-year increase in net interest income due to rising interest rates. The net interest margin increased by 99 basis points compared to the third quarter of 2021 to reach 2.91%. It was boosted by the recent acquisition of TriState Capital Bank.

This helped offset lower year-over-year revenue in the asset management, brokerage and investment management businesses.

Additionally, the company posted earnings per share of $2.03, down 2% year over year but up 44% from the prior quarter. The company exceeded revenue and profit expectations.

As this was the fourth quarter report, Raymond James also released year-end figures, which set records. Raymond James achieved record net sales of $11 billion, up 13% from the prior year, and record annual earnings per diluted share of $6.98, up 5% from compared to the previous year.

“Despite the difficult and volatile market environment during the year, we generated record results with annual net revenue and pre-tax profit growth of 13%, which was driven by strong organic growth, in particularly in Private Wealth, the benefit of higher short-term interest rates and, most importantly, the unwavering dedication of our advisors and associates to always put their clients first,” said President and Chief Executive Officer. Raymond James Financial executive Paul Reilly in a statement.

Now what

Heading into its first fiscal quarter of 2023 and beyond, Raymond James will again rely on interest income and banking to drive revenue gains as the outlook for the investment banking business , brokerage and asset management will remain challenged by the bleak 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’s a pretty good value. And with recent strategic acquisitions, such as TriState Capital and bond market maker SumRidge Partners, it continues to grow and diversify its capabilities so it can operate in any market environment, as it has shown this year. .

Dave Kovaleski has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.

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