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Raymond James Financial Inc RJF

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Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Increasing Our FVE for Raymond James to $109 on Higher Revenue and Operating Margin Forecast

Michael Wong, CFA, CPA Sector Director

Analyst Note

| Michael Wong, CFA, CPA |

We are increasing our fair value estimate for no-moat Raymond James Financial to $109 per share from $97. This implies a forward price/earnings ratio of about 13.5 times and a price/book ratio of 2 times. The net $12 increase in our fair value estimate is from multiple adjustments. Approximately $2 of the increase is from earnings since our previous valuation update. Of the remaining net $10 increase in our fair value estimate, $7 is from a higher revenue forecast primarily from the recent increase in client assets, $10 is from increasing our long-run projected operating margin for the company by 1.5 percentage points after reassessing operating margins in light of eventually higher interest rates, and we had a negative $7 adjustment from assuming that the corporate income tax rate will increase.

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Company Profile

Business Description

Raymond James Financial is a financial holding company whose major operations include wealth management, investment banking, asset management, and commercial banking. The company has more than 14,000 employees and supports more than 4,000 independent contractor financial advisors across the United States, Canada, and the United Kingdom. Approximately 90% of the company's revenue is from the U.S. and 70% is from the company's wealth management segment.

Contact
880 Carillon Parkway
Saint Petersburg, FL, 33716
T +1 727 567-1000
Sector Financial Services
Industry Capital Markets
Most Recent Earnings Mar 31, 2021
Fiscal Year End Sep 30, 2021
Stock Type Cyclical
Employees 14,800

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