RJF stock earns IBD Stock Of The Day status as the provider of investment and financial services tops an early entry. It is also near a traditional buy point as the interest rate tightening cycle gets underway.
Raymond James boasts a network of 8,500 financial advisors. It also offers investment banking, securities trading, equity research and other financial services.
The financial company entered 2022 with record client assets of $1.26 trillion and record net loans at Raymond James Bank of $26.1 billion. Peer LPL Financial, also with assets at record highs, was IBD Stock of the Day April 8.
But JPMorgan Chase warned Wednesday that the market upheaval caused by Russia's Ukraine invasion had hit its corporate and investment bank segment. The stock market volatility also prompted Chase to set aside more money to cover inflation risks.
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Interest Rates Jump
Banks and financial companies, including Raymond James, tend to benefit from rising interest rates.
The 10-year U.S. Treasury yield briefly topped 2.82% Tuesday, a three-year high. It has now pulled back to just below 2.68%. Expectations for the combined Fed rate hikes and the unwinding of bond purchases have sent bond prices sharply lower, leading to a jump in Treasury yields.
The Federal Reserve's federal funds rate was near zero throughout 2021. But on March 16, the Fed hiked its key interest rate for the first time since 2018 and signaled six more increases to come this year.
Higher interest rates give a boost to net interest margins. Loans represented about 70% of Raymond James total assets for the fiscal year ended Sept. 30, 2021.
RJF Stock Technical Analysis
Shares of Raymond James Financial rose 3.2% to 111.64 on the stock market today. RJF stock topped a 110.27 early entry, plotted off Monday's high. It's less than 5% below a traditional 114.10 buy point from a cup-with-handle base stretching back to Feb. 10.
Raymond James Financial sits above the 21-day exponential moving average while the tech-heavy Nasdaq remains below the 21-day as well as the 50-day average. Stocks sold off broadly after volatility fueled by the Russia-Ukraine war, inflation and rate hikes.
The relative strength line for RJF stock is closing in on February's highs, according to MarketSmith charts. That strength indicator rallied in the past year. A rising RS line means that a stock is outperforming the S&P 500.
Florida-based Raymond James belongs to the Finance-Investment Banks and Brokers group.
Among 31 stocks in this group, Raymond James Financial is No. 2 in terms of its IBD Composite Rating, behind LPL Financial. Raymond James earns a Comp Rating of 89 out of 99. The rating combines key fundamental and technical metrics in a single easy-to-use score.
Other highly rated stocks in this group include Ameriprise Financial, Stonex Group and Charles Schwab.
An IBD Relative Strength Rating of 88 means that Raymond James Financial has outperformed 88% of all stocks in IBD's database over the past year.
However, the industry group lags with a No. 123 ranking out of 197 groups tracked by IBD.
Raymond James Financial Earnings
The broker dealer bears a strong EPS Rating of 94 out of 99.
For its latest fiscal quarter, ended Dec. 31, Raymond James posted a 42% EPS jump year over year. Revenue increased 25% to $2.78 billion.
"We also ended the quarter with record clients' domestic cash sweep balances, which should bode well with the anticipated rise in short-term interest rates," CEO Paul Reilly said in a Jan. 26 earnings release.
Analysts on Wall Street expect Raymond James earnings to decline by low single digits for the next three quarters, according to FactSet.
In 2021, Raymond James earnings rebounded 73% after a 17% decline the prior year. Analysts on Wall Street forecast RFJ earnings will slow to a 9% gain in all of 2022, then jump 33% in 2023. Revenue is seen growing 13% in 2022 and 14% in 2023.
Raymond James holds an SMR Rating of A, on a scale of A to a worst E. The SMR Rating is a combined measure of sales growth, profit margins and return on equity.
More than 1,600 funds held RJF stock as of March. The stock boasts eight quarters of rising fund ownership, according to the IBD Stock Checkup tool.
