
Raymond James Financial delivered a strong performance in its latest quarter, exceeding Wall Street expectations, driven by robust investment banking activity and steady growth in client assets.
The firm reported adjusted earnings per share of $2.93 for the quarter ended Dec. 31, surpassing analysts’ consensus estimate of $2.68. This marked a significant jump from the previous year’s $2.32 per share. Revenue reached a record $3.54 billion, ahead of the $3.487 billion forecast and up from $3.01 billion in the same quarter of 2023.
Despite the strong financial results, Raymond James shares declined 0.7% Thursday morning, while the S&P 500 gained 0.3%. Year to date, the stock is up 9.72%, outperforming the S&P 500’s 3% increase.
CEO Paul Reilly expressed confidence in the firm’s outlook, citing strong client asset levels, solid loan growth, and continued momentum in financial advisor recruiting and investment banking. “Despite some seasonal headwinds, we are optimistic entering the fiscal second quarter,” Reilly said.
Total client assets under administration climbed 14% to $1.56 trillion, benefiting from rising equity market valuations and steady net inflows. The firm’s Private Client Group added $14 billion in net new assets during the quarter and posted record revenue of $2.55 billion, reflecting 14% year-over-year growth.
However, net new asset growth was impacted by the departure of a significant advisor practice from the firm’s independent contractor division. The practice, managing approximately $5 billion in client assets, transitioned away from Raymond James. Reilly reassured that recruiting efforts remain strong, highlighting that over the past year, the firm onboarded advisors responsible for $318 million in annualized production and overseeing $51 billion in client assets.
Investment banking drove substantial gains in the firm’s capital markets segment, which saw revenue surge 42% year over year to $480 million. M&A activity remained “robust,” and Reilly expressed confidence that favorable market conditions will support continued deal flow. “We remain optimistic for the rest of the fiscal year as the market environment is more conducive to transaction closings and our platform and capabilities are well positioned,” he said.
Raymond James isn’t alone in benefiting from a revival in dealmaking. Stifel Financial also credited strong investment banking results for its fourth-quarter earnings growth.
On the earnings call, analysts questioned executives about capital deployment. President Paul Shoukry emphasized that the firm’s priority remains investing in organic growth, particularly through advisor recruiting. He acknowledged the firm is actively exploring acquisition opportunities but offered limited details. “We can’t say much about that other than we have had some activity there,” he said. While share buybacks are a possibility, Shoukry noted that any repurchases must be carefully timed to avoid limiting future acquisition flexibility. “Last thing we want to do is do a lot of buybacks only to have to raise a lot of capital to do an acquisition,” he explained.
Raymond James is also navigating a leadership transition, with Shoukry set to succeed Reilly as CEO on Feb. 20. Reilly, who has led the firm for 14 years, will assume the role of executive chairman.
During his final earnings call as CEO, Reilly reflected on his tenure and expressed confidence in the next generation of leadership. “I’m not riding off into the sunset,” he said. “As executive chairman, I’ll be here to support Paul when he needs it, just as [former CEO] Tom James did for me 14 years ago.”
With strong financial results, sustained advisor recruitment, and an optimistic outlook for investment banking, Raymond James remains well-positioned for continued growth in 2024.