Raymond James (RJF)

Financial services firm Raymond James Financial (NYSE:RJF) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 7.7% year on year to $3.73 billion. Its non-GAAP profit of $3.11 per share was 10% above analysts’ consensus estimates.

Company Overview

Founded in 1962 and headquartered in St. Petersburg, Florida, Raymond James Financial (NYSE:RJF) is a diversified financial services company that provides wealth management, investment banking, asset management, and banking services to individuals and institutions.

Investment banks and brokerages facilitate capital raises, mergers and acquisitions, and securities trading. The sector benefits from corporate activity during economic expansion, increased retail trading participation, and advisory opportunities in emerging sectors. Headwinds include economic cycle vulnerability affecting deal flow, compressed trading commissions due to electronic platforms, and regulatory capital requirements constraining certain higher-risk activities.

Raymond James Financial competes with major financial services firms including Morgan Stanley (NYSE:MS), Bank of America's Merrill Lynch (NYSE:BAC), UBS Group (NYSE:UBS), and Charles Schwab (NYSE:SCHW), as well as regional broker-dealers and independent advisory firms.

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, Raymond James’s 12% annualized revenue growth over the last five years was solid. Its growth surpassed the average financials company and shows its offerings resonate with customers, a great starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Raymond James’s annualized revenue growth of 10% over the last two years is below its five-year trend, but we still think the results were respectable. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Raymond James reported year-on-year revenue growth of 7.7%, and its $3.73 billion of revenue exceeded Wall Street’s estimates by 2.7%.

Assets Under Management (AUM) encompasses all client funds under a firm's investment management umbrella. The recurring fee structure on these assets provides consistent revenue generation, offering financial stability even during periods of poor investment returns, though sustained underperformance can impact future asset flows.

Raymond James’s AUM was flat over the last five years, much worse than the broader financials industry and worse than its total revenue. When analyzing Raymond James’s AUM over the last two years, we can see that growth accelerated to 14.9% annually. Fundraising or short-term investment performance were net contributors for the company over this shorter period since assets grew faster than total revenue. But again, we put less weight on asset growth given how lumpy and cyclical it can be.

In Q3, Raymond James’s AUM was $274.9 billion. This print was 12.3% higher than the same quarter last year.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Investment Banking & Brokerage companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

Interest income and expenses play a big role in financial institutions' profitability, so they should be factored into the definition of profit. Taxes, however, should not as they are largely out of a company's control. This is pre-tax profit by definition.

Over the last four years, Raymond James’s pre-tax profit margin couldn’t build momentum, hanging around 19.3%. It was also flat on a two-year basis, showing the company has consistently failed to improve its efficiency.

Raymond James’s pre-tax profit margin came in at 19.6% this quarter. This result was 2.3 percentage points worse than the same quarter last year.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Raymond James’s EPS grew at a spectacular 21.2% compounded annual growth rate over the last five years, higher than its 12% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Raymond James, its two-year annual EPS growth of 13.2% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q3, Raymond James reported adjusted EPS of $3.11, up from $2.95 in the same quarter last year. This print beat analysts’ estimates by 10%. Over the next 12 months, Wall Street expects Raymond James’s full-year EPS of $10.64 to grow 10.6%.

Financial firms profit by providing a wide range of services, making them fundamentally balance sheet-driven enterprises with multiple intermediation roles. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these multifaceted institutions.

This is why we consider tangible book value per share (TBVPS) an important metric for the sector. TBVPS represents the real net worth per share across all business segments, providing a clear measure of shareholder equity regardless of the complexity of operations. Traditional metrics like EPS are helpful but face distortion from the complexity of diversified operations, M&A activity, and various accounting rules that can obscure true performance across multiple business lines.

Raymond James’s TBVPS grew at a solid 11.2% annual clip over the last five years. TBVPS growth has also accelerated recently, growing by 17.2% annually over the last two years from $39.41 to $54.12 per share.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, Raymond James has averaged an ROE of 17.9%, impressive for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows Raymond James has a strong competitive moat.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Raymond James has averaged a Tier 1 capital ratio of 22.5%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

It was good to see Raymond James beat analysts’ revenue and EPS expectations this quarter. Additionally, tangible book value per share beat. Overall, we think this was a decent quarter with some key metrics above expectations. The stock remained flat at $166.40 immediately following the results.

Updated: December 4, 2025 at 11:15 PM EST

When considering an investment in Raymond James, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Raymond James is a rock-solid business worth owning. For starters, its revenue growth was solid over the last five years, and analysts believe it can continue growing at these levels. On top of that, its expanding pre-tax profit margin shows the business has become more efficient, and its spectacular EPS growth over the last five years shows its profits are trickling down to shareholders.

Raymond James’s P/E ratio based on the next 12 months is 13.2x. Looking across the spectrum of financials companies today, Raymond James’s fundamentals shine bright. We like the stock at this price.

Wall Street analysts have a consensus one-year price target of $183.80 on the company (compared to the current share price of $162.60), implying they see 13% upside in buying Raymond James in the short term.