Raymond James Analysis - ducascap.comadvised by Thomas A. James, the former CEO, who led the company...
Transcript of Raymond James Analysis - ducascap.comadvised by Thomas A. James, the former CEO, who led the company...
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RaymondJames($RJF)Analysis
TableofContents
ExecutiveSummary...............................................................................................................................2
DescriptionoftheBusiness...................................................................................................................3Segments..........................................................................................................................................3
PrivateClientGroup(PCG)............................................................................................................3CapitalMarkets(CM)....................................................................................................................4AssetManagement(AM)..............................................................................................................4RJBank.........................................................................................................................................5Other............................................................................................................................................5
Management....................................................................................................................................5StockOwnership...............................................................................................................................6
KeyStatistics.........................................................................................................................................7
TrackRecord.......................................................................................................................................10StockPerformance..........................................................................................................................10FinancialAdvisers...........................................................................................................................12
GrowthFactors....................................................................................................................................13ExpansionthroughAcquisitions......................................................................................................13InflowofCapitalandAdvisers.........................................................................................................13OperatingMarginExpansion...........................................................................................................14MacroeconomicRebound...............................................................................................................14InterestRates..................................................................................................................................14
Valuation............................................................................................................................................14PricetoBook(P/B)..........................................................................................................................14PricetoEarnings(P/E).....................................................................................................................15TradingComps................................................................................................................................16DiscountedCashFlow.....................................................................................................................16
LatestAcquisitions..............................................................................................................................17AcquisitionofDeutscheBank’sU.S.PrivateClientServicesUnit......................................................17AcquisitionofMorganKeegan........................................................................................................18
Risks....................................................................................................................................................18DepartmentofLabor(DOL)Fiduciary(“ConflictsofInterest”)Rule.................................................18MacroConditions............................................................................................................................19ExposuretoEnergy.........................................................................................................................19ContinuedPricingPressuresinCertainSegments............................................................................19
Conclusion...........................................................................................................................................19
CollatedAnnualFinancialDataSince2008..........................................................................................20IncomeStatement...........................................................................................................................20BalanceSheet.................................................................................................................................22CashFlow........................................................................................................................................24
Disclaimer...........................................................................................................................................27
References..........................................................................................................................................27
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ExecutiveSummaryForthepastfewmonths,stockshavebeenonafreefall,largelycausedbylacklustermacroeconomicperformance.Thishasledtoalargeamountofcompaniesappearingasoversoldandundervaluedtoinvestors. At a time like this, I cannot help but be reminded of one of Warren Buffet’s mostrenownedquotes:“Befearfulwhenothersaregreedyandgreedywhenothersarefearful”.WhileIdonot think itwouldbehoove investors tobuy into any security that appears tobe ‘cheap’, I dobelieve market corrections present formidable buying opportunities into high-quality businessesthathavebeenfundamentallymispricedbythemarket.OnesuchbusinessthatIfeelissignificantlyundervaluedisRaymondJamesFinancialInc.(NYSE:RJF),afinancialservicescompany.Overthepastfewmonths,RJFhasbeenpushedfromahighof$59.32onDecember42015toalowof$41onFebruary122016.Otherthanbeingsignificantlyoversold,RaymondJamesisastrongbusinesswhoserigidfundamentalspointtosubstantialfuturegrowth.ThefactorsbelowcontributetomybeliefthatRJFwillreach$60withinthenexttwoyears.
• EarningsPerSharegrowth,PricetoBookandPricetoEarningsmultiplesindicateupside• Clientsand financialadvisershavebeenandwill continue to re-allocatecapital from large
WallStreetbankstoindependentones,namelyRaymondJames• RJFwillreapthebenefitsofitsrecentacquisitions,includingthatofMorganKeeganandof
DeutscheBank’sPrivateClientService• Secularadjustments,varyingfromeconomicgrowthtomoreinvestinginthestockmarket,
willdriveassetsundermanagement(AUM)higher• RJF’s growing brand-recognition will attract more business from private and institutional
privateclients• Conservativeand shareholder-orientedmanagementwill continue topush for growthand
expansion• Overcapitalizedbalancesheetwillallowforadditional stockbuybacksandwill fuel further
acquisitions• RisinginterestrateswillgeneratehigherrevenuethroughRJBank• MacroeconomicameliorationwillleadtogreaterbusinessactivityforRJF
The aforementioned points will lend themselves to increasing revenues and improving operatingmargins.Therefore,therecentmarketturmoilpresentsabuyingopportunityforastockwithplentyofcapacityfortheupside.
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DescriptionoftheBusiness
SegmentsRaymond James is a financial institution operating in the financial services sector. The firm iscomprised of four main segments: Private Client Group (PCG), Capital Markets (CM), AssetManagement(AM),andRJBank.
PrivateClientGroup(PCG)PCGisthelargestdivisionofRaymondJames,makingupovertwothirdsofnetrevenues.Itcurrentlyemploys6,600advisersandabout$500billioninassetsunderadministration(AUA).ThroughPCG,Raymond James provides financial planning and securities transaction services to more than 2.7millionclientaccounts.RJFiscurrentlytheseventhlargestbrokerintheUnitedStates.In2015,thePCGgroupgenerated$3.5billioninrevenue.ThefunctionsofPCGarelistedbelow:
• ProvideinvestmentservicesforwhichRJFchargessalescommissionsorasset-basedfees• Offerinvestmentadvisoryservices• Sellinsuranceandannuityproductsthroughtheinsuranceagency• Providemutualfundinvestmentoptions• Facilitatetransactionsandprovideloansonsecurities.RJFchargesinterestonmarginloans
74%ofrevenueproducedbyRJFisrecurringandincludesfeesaspercentagesofassetsorfixedfeearrangements.Theother26%compriseoftransactionfeesandtradingcommissions.Aswithmanyother aspects of Raymond James, different segments cooperate, and, in this case, PCG can earncommissionsonpublicofferingsthattheCapitalMarketsgroupunderwrites.Over54%ofRJF’sfinancialadvisersarenotemployeesofthebusinessandareinsteadindependentcontractors.Therearemanybenefitstooperatingundersuchastrategyascontractorspayfortheirown overheads, which can lessen the pain in the case of a recession. Because of this, Raymond
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Jamestendstooutperformitscompetitors.However,adownsideofthemodelisthatindependentcontractors receive larger commissions relative to employed brokers, which lowers operatingmargins.Inthefinancialadvisorybusiness,retainingadvisersisparamount.Thankfully,RJFhasgrownbothitsadviserbaseand itsmarketsharesince1962.Themajorityofthisgrowthhassofarbeenorganic,though it does sometimes pursue inorganic methods such as through acquisitions, as long as itmaintainsaninternal15%returnonequity.AsmentionedbyCEOPaulReilly,“Whileourpreferenceisgenerallyorganicgrowth,wehaveusedstrategicmergers togrowthroughoutourhistorywhenthetimingandpricingarerightand,mostimportantly,whenthereisastrongculturalfitandclearpathforintegration.”Consequently, in2012,RaymondJamesboughtMorganKeeganoutfor$930million.This transactionprovidedRJFwith900additionaladvisers,98%ofwhoremainedwiththefirm,whichpoints to strong retention.Additionally,RJFexpanded itsnumberof in-housebrokers,indicatingapushbythefirmtolessenitsdependenceonindependentcontractors.
CapitalMarkets(CM)TheCapitalMarkets segmentoffersmanyof the services that canbeexpected froma traditionalinvestment-banking firm, including: M&A advisory, underwriting services, institutional sales,securitiestradingandequityresearch.ThispartofRJF’sbusinesscanbeviewedasbeingcyclicalasdemandforservicestendstofluctuateaccordingtobroad-marketconditions.Recently, the firm has seen a decline in its underwriting business due to tenuous IPO activity.Further,whileM&Asurged in2015, ithasbeguntocooldownasseen inRJF’s2015Q4quarterlyreport,whererevenuegrowthintheCMgroupslowed.AssetManagement(AM)Raymond James’AssetManagement armgenerates revenuesbyproviding investment advice andassetmanagementservicestoindividualandinstitutionalinvestmentportfolios,aswellastomutualfunds.AsofSeptember2015,therewere$65.2billioninfinancialassetsheldinmanagedprograms
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(investing at the discretion of the AM branch) and $91 billion in financial assets held in non-discretionaryasset-basedprograms(investingwithoutRJFadvice),accordingtoRJF’s10K.Over50%ofassetsareinvestedinequities,14%infixedincomeand36%inbalancedprograms.RJBankOperatingasatypicalbankingoperation,RJBankprovidescorporate,securitiesbased loans (SBL),residential loans, butmostly large syndicated loans. RJ Bank has a total of $14.2 billionworth ofassets.ThoughnottheRJF’sgreatestrevenue-generator,RJBankhasgrownsteadilyinthepastfewyears,expanding18%between2014and2015,outpacingeveryothersegment.
OtherTheOthersegmentincludesprincipalcapitalandprivateequityactivitiesaswellascertaincorporatecosts, including acquisition and integration costs. Revenue from this segment varies year to yearaccordingtocorporateactivitiesundertakenbyRJF.
ManagementRaymond James is runbyagroupof industryveteransknown for their conservativemanagementstyle.PaulReillycurrentlyservesasCEOofthecompany,apositionhehasheldsince2010,andisadvisedbyThomasA.James,theformerCEO,wholedthecompanyfor40yearsandwhocurrentlyactsasExecutiveChairman.Thefirm’seffectiveleadershipwasespeciallywitnessedduringthe2008recession,asitwasoneofthefewbankstobeleftrelativelyunscathed(asseenbythechartbelow).RJF’sleadershipiscertainlyshareholder-oriented,whichisevidencedbyitshighinsiderownership–managementownsroughly10%ofstockornearly5xpeergroupaverage.
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StockOwnershipManagementrecognizeswhenthebusiness isundervaluedandhas itselfdisclosed inarecentSECfiling that“historically,we’veconsidered repurchasingsharesofourcommonstockwhen thepricethereofisnearorbelow1.5timesbookvalue”.Thisissubstantiatedbytheirrecentmovetoincreaserepurchaseauthorizationto$150millionrelatingtocommonstockandoutstandingseniornotes.Inaddition,RJFhasatrackrecordofconstantlyraisingdividendsoverthepastdecade.Mostrecently,ithikeditsdividendinNovemberof2015by11%to20centspershare.Itisalsointerestingtonotethat,unlikemanyothercompanies,managementdoesnotexcludestock-basedcompensationfromitsearningsdata.Insider buying has been ramping up recently, with Francis Godbold, RJF’s former President andcurrentViceChairman,buyingover41,000sharessincethe25thofJanuary2016atanaveragepriceof$41.50.ThelasttimeMr.GodboldgotinvolvedandpurchasedcompanyshareswasinAugustof2011atapriceof$26.Followingthis,thestockclimbedover90%withinthreeyears,pointingtoMr.Godbold’sabilitytocorrectlypredictRJFpricemovements.FrancisGodboldTrading
Trade Date Trade Type Shares Price ($) Value ($) 2016-02-11 Buy 18,000 40.05 720,846 2016-02-03 Buy 20,000 40.94 818,880 2016-01-25 Buy 22,000 43.57 958,474 2011-08-10 Buy 5,989 25.90 155,115 2011-08-08 Buy 10,000 26.25 262,500 2011-08-09 Buy 8,600 26.22 225,500 2008-01-28 Buy 100,000 26.12 2,611,700
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KeyStatistics
Current Valuation
Market Cap 6351.4273
Enterprise Value 5809.1913
PE Ratio (TTM) 13.6599
Earnings Yield (TTM) 7.3207
PS Ratio (TTM) 1.2587
Price to Book Value 1.3668
EV to Revenues (TTM) 1.1124
EV to EBIT (TTM) 6.8519
Operating Earnings Yield (TTM) 11.261
Cash Flow Statement
Cash from Financing (TTM) 1385.788
Cash from Investing (TTM) -2259.234
Cash from Operations (TTM) 886.937
Capital Expenditures (TTM) 93.634
Liquidity and Solvency
Current Ratio (Quarterly) 0.902
Debt to Equity Ratio (Quarterly) 0.3831
Free Cash Flow (Quarterly) 194.828
Tangible Common Equity Ratio (Quarterly) 16.1023
Income Statement
Revenue (TTM) 5222.267
Revenue (Per Share Quarterly) 8.7211
Revenue (Quarterly YoY Growth) 1.7611
EPS Diluted (TTM) 3.2914
EPS Diluted (Quarterly YoY Growth) -16.092
Net Income (TTM) 482.173
EBITDA (TTM)
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Balance Sheet
Cash and Short Term Investments (Quarterly) 2596.388
Non-Current Portion of Long Term Debt (Quarterly) 1780.323
Total Assets (Quarterly) 26907.327
Total Liabilities (Quarterly) 22260.513
Shareholders Equity (Quarterly) 4646.814
Book Value (Per Share) 32.3322
Tangible Book Value (Per Share) 29.7271
Management Effectiveness
Asset Utilization (TTM) 0.2049
Days Sales Outstanding (Quarterly) 202.6586
Days Inventory Outstanding (Quarterly)
Days Payable Outstanding (Quarterly)
Receivables Turnover (Quarterly) 0.4503
Return on Assets (TTM) 1.8921
Return on Equity (TTM) 10.8171
Return on Invested Capital (TTM) 7.308
Common Size Statements
Net Income (% of Quarterly Revenues) 8.3427
Net Income (% of Annual Revenues) 9.6561
Stock Price Performance
Beta 1.5341
1 Month Price Returns (Daily) 4.1464
3 Month Price Returns (Daily) -22.8155
6 Month Price Returns (Daily) -13.7541
Year to Date Price Returns (Daily) -22.4426
1 Year Price Returns (Daily) -21.2885
3 Year Price Returns (Daily) 2.5781
52 Week High (Daily) 61.82
52 Week Low (Daily) 39.84
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Dividends and Shares
Shares Outstanding 141.2684
Dividend 0.2
Dividend Yield (Forward) 1.78
Dividend Yield (TTM) 1.6459
Cash Dividend Payout Ratio (TTM) 13.4404
Payout Ratio (TTM) 22.113
Dividend Date 1/15/16
Ex-Dividend Date 12/30/15
Last Split Factor 1.5
Last Split Date 3/23/06
Profitability
Gross Profit Margin (Quarterly)
Profit Margin (Quarterly) 8.3427
EBITDA Margin (TTM)
Operating Margin (TTM) 14.1746
Estimates
Sales Estimates for Current Quarter 1389
Sales Estimates for Current Fiscal Year 5593
EPS Estimates for Current Quarter 0.83
EPS Estimates for Current Fiscal Year 3.36
PE Ratio (Forward) 11.9153
PE Ratio (Forward 1y) 10.6163
PS Ratio (Forward) 1.1354
PS Ratio (Forward 1y) 1.0491
Employee Count Metrics
Total Employees (Annual) 11000
Revenue Per Employee (Annual) 488282.6291
Net Income Per Employee (Annual) 47149.2958
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TrackRecord
StockPerformanceRaymondJamessportsoneofthemostsolidandimpressivetrackrecordsintheindustry.Inthepast13years,thefirm’searningspershare(EPS)hasgrownata13.25%CAGRandthefirmhasreportedover112consecutiveprofitablequarters.Even inthemidstof therecession, thecompanydidnotlosemoneyandEPSfellbyabout33%,afractionofthe lossthatotherfinancial institutions inthesector encountered. Thiswasmostly due tomanagement’s decision to not stray away fromRJF’straditional services, such as its PrivateClientGroup andCapitalMarkets operation,which receivefee-based incomes and benefit from high return-on-equity (ROE). This is further evidence ofmanagement’sconservative,long-termapproach.
What isespeciallynoteworthy isthecompany’scommitmenttomaximizingshareholdervalueandreturning capital to investors. At no time since its founding has Raymond James decreased itsdividend– ithas insteadliftedtheamountpaidouttostockholdersonaregularbasis.Theannualdividendiscurrently$0.80,upfrom$0.16morethanadecadeago,representingaCAGRofupwardsof13%.Historicallyspeaking,RJFincreasesitsdividendroughlyeverytwoyears.
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Duetothesefactors,RJFhasbecomeoneofthebest-performingstocksintheS&P500andinthefinancialsector.
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While usually a high-performer, RJF’s stock has recently undergone a correction, dropping from$59.14onDecember29toalowof$40.43onFebruary11,apricemovementof31.64%.Becauseofthis, the current price level of $42.92 represents a bargain. The drop in price can mostly beattributed to excessive volatility in the financial sector and negative macro conditions, whichaffectedthecompany’srosygrowthforecasts.Asmentionedinthe2015shareholderletter:
“Our results for fiscal 2015 were excellent under the [negative market conditions] circumstancesdescribed above, although we had hoped for more growth at this time last year. Net revenuesachievedanewrecordlevelof$5.2billion,surpassing2014resultsby7%.Recordnetincomeof$502millionexceeded last year’s comparable resultsby5%.Net incomeperdiluted commonsharewas$3.43, up 3% over last year. The annual after-taxmargin on net revenueswas down by 20 basispoints from last year to9.7%. Theafter-tax returnonaverageequity for the2015 fiscal yearwas11.5%, down 80 basis points from last year, which was acceptable in the more challengingenvironment. Shareholders’ equity attributed to Raymond James Financial increased to a healthy$4.52billiononSeptember30,2015,or$31.68pershare,andthetangiblebookvaluepershare(anon-GAAPmeasure)was$29.17.”
FinancialAdvisersAs a wealthmanagement and financial advisory business, Raymond James is required to place alarge emphasis on the people it recruits, and especially its advisers. Hiring high-quality advisersdrivesbothassetsundermanagementandassetsunderadministration,and,asa result, revenuesand earnings. Many of its recent moves, including the acquisition of Deutsche Bank’s wealthmanagement segment (see“LatestAcquisitions” formore),haveasagoal togrow theamountoffinancial advisers. In the company’s recent conference call, Chief Executive Paul Reilly remarked,“Whileweareoptimisticaboutmaintainingmanyoftheadvisers,we’renotnaiveandweknowby
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lookingatotherrecenttransactionsthatrecruitersthroughoutthecountryhavebeencallingandwillcontinue calling our advisers withmuch bigger and sometimes irrational checks.” RJF has done aterrific job retaining and recruiting advisers, mainly because of the “adviser-centric” culture itpromotes. This is evidenced by the fact that 98% of advisers it hired through its acquisition ofMorganKeeganremainedwiththefirm.Withthis inmind,RJFshouldhaveno issueexpanding itsadvisorypractices intothe future,and, instead, thanks to itsgrowingbrandnameandoperations,shouldseeaninfluxofadvisers.
GrowthFactors
ExpansionthroughAcquisitionsRaymondJameshasstrategicallybeenacquiring industrypeers (see“LatestAcquisitions”) inorderto expand its assetmanagement,wealthmanagement and financial advisory businesses. This hasbeendonetonotonlygrowitsoperationsbutalsotoexpanditsgeographicalreach.TheDeutscheBankacquisition, for example, grewRJF’spresenceacross thehighly affluentNortheast andWestCoastoftheUnitedStates.RJF’sovercapitalizedbalancesheetwillprovidecapitaltofueladditionalacquisitionsanditsrevenueline.Relativetoitsassetmanagementpeers,RJFsportsalowervaluationandP/Bratio.CompanieslikeAmeriprise Financial and Franklin Resources trade at multiples of upwards of 1.9x and 1.7x,respectively,whileRaymondJamestradesat1.3x.Themaindistinctionisthatthosefirmsderivealarger portion of their revenue from their assetmanagement operations. As RJF expands its AMbusinessthroughacquisitionsandinternalgrowth,itshouldalsobeableincreaseaggregatevalue.
InflowofCapitalandAdvisersAs mentioned in the “Financial Advisers” section, an expanding advisory business grows AUM.RaymondJameshasbeenverysuccessfulinrecruitingtopadvisersandattractingcapital.Thisinturnpropelsrevenuegrowth.BelowareRJF’slatestmajorhiringmoves:
• November2015:RaymondJamesbroughtina$450millionbrokerteamfromWellsFargo.• March2015:Raymond Jameshireda teamof financialadvisers fromMorganStanleywho
manageroughly$150million.• February2015:Raymond James recruiteda teamofadvisers fromWilliamBlair&Cowho
manage$524millioninassets.• December 2014: Raymond James hired an advisory team, which manages $1 billion in
assets,fromJPMorgan.
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OperatingMarginExpansionRaymondJamesalreadysportshigheroperatingmarginsof14.2%thantheindustryaverageof7.7%.Nevertheless,economicgrowth,increasingassetpricesandhigherinterestrateswillcauseanincreaseinrevenues,whichwillleadtoacontinuedriseinoperatingmargins.Inaddition,afocusonRJF-employedfinancialadvisersinsteadofindependentadvisersresultingfromtheMorganKeeganacquisitionshouldfurtherexpandmargins.Duetothese,earningsderivedfromthePCGsegmentwillimproveoverthecomingyears.
MacroeconomicReboundFor the past fewmonths, lackluster economic data has plagued themarkets and dragged broad-market share prices lower. This was especially felt within financial stocks and is the underlyingreasonbehindRJF’sdip.RaymondJamescertainlydependsonastrongeconomytothrive,andanyevidencepointingtothecontrarycanbedetrimentalfortheshareprice.However,theseconcernsare both short-lived and cyclical so once macro fundamentals improve in the coming months,RaymondJamesshouldseeabouncebacktolevelsseenbeforethestartofthebearmarketat$58.
InterestRatesThe Fed has already indicated that rates will remain unchanged for the foreseeable future, and,givenpoormarketconditions,itissafetoassumethisforecastwillendure.However,whenratesdorise,RJFwillstandtobenefit,mostlyintheformofhigherinterestpaymentsanddepositsthroughRJBank.
Valuation
PricetoBook(P/B)Based on the current (24 February) share price of $42.92 and 2015 Q4 book value per share of$32.33, theP/B ratio stands at 1.33x.Mybelief is thatRaymond James’ P/Bwill eventually reachpre-recessionlevelsof2.23x.Givensharesatthattimetradedathalfwhattheyweretradingafewmonths ago, it can be inferred that they did not indicate a top. Thus, with a P/B of 2.23x and(current)bookvalueof$32.33,theensuingpriceis$72.Withaconservativeestimate,however,P/Bshouldstandat1.95x,whichwasseenseveral timesover thecourseof thepast twoyears,whichwould result in a target price of $63. Historical data (2011-2015) shows book value per shareincreasingby$2.845(onaverage)year-over-year.Alowestimatewouldyieldariseinbookvalueby$2.5, to$34.83, in fourquarters.Using theP/Bof1.87x seenbefore thepricedroponDecember29th,a$34.33bookvaluewouldpositionthesharepriceat$58.86,representingupsideof37%.Unlessasevererecessionhits, Ibelievethatbyyear-end2016/early2017,RJFcouldtradeat$60.This isassumingcontinuedgrowth inP/B to1.50xandabookvalueof$40.25.Following this,RJFcouldre-visitpre-recessionP/Blevelsandtop$72.
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ItisworthpointingoutthatatthetimeFrancisGodboldpurchasedhissharesatthebottomin2011,RaymondJamesstockwastradingatroughly$26persharewithaBVof$20.74,makingP/B1.3x,whichisrelativelyclosetothe1.33xseencurrently.HistoricalBookValuePerShare
Dec. 31, 2015 32.33 Sept. 30, 2015 31.64 June 30, 2015 31.12 March 31, 2015 30.65 Dec. 31, 2014 30.04 Sept. 30, 2014 29.33 June 30, 2014 28.51 March 31, 2014 27.66 Dec. 31, 2013 26.98 Sept. 30, 2013 26.25 June 30, 2013 25.46 March 31, 2013 24.96 Dec. 31, 2012 24.40 Sept. 30, 2012 23.73 June 30, 2012 22.98 March 31, 2012 22.49 Dec. 31, 2011 20.95
PricetoEarnings(P/E)SinceRaymondJamesisafinancialinstitution,itismoresuitabletousePricetoBookasopposedtoPricetoEarnings.Thatsaid,RJF’sTTMP/Ecurrentlystandsat13.04,whichrepresentsthelowofitshistorical rangeof 13-21x, according to S&PCapital IQ. Even relative to its competitors,RaymondJames remains incredibly cheap.Stifel Financial (SF)andLPLFinancial (LPLA) typically tradeatP/Erangesof21-26xand18-26x,respectively,eventhoughRJFhasoutperformedbothstocks.
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TradingComps
ThetradingcompsmodelIbuiltprovidesfurtherevidenceofRJFtradingatadiscountrelativetoitspeers:UBSGroup(UBS),BGCPartners(BGCP),StifelFinancial(SF)andLPLFinancialHoldings(LPLA).
DiscountedCashFlow
BasedontheDiscountedCashFlow(DCF)usingBloombergassumptions,RJF’sintrinsicpricebasedontheperpetuitygrowthmethod liesat$108.46,whichsignifiesupsideof134%.WACCstandsat8.8%andperpetuitygrowthat3.7%.
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Atthesametime,usingthesameWACCestimateandanexitenterprisevalueof9.1x,theEBITDAMultipleMethodyieldsanintrinsicpriceof$82.18,indicatingupsideof77%.TheDCFfurthersupportstheviewthatRJFissignificantlyundervalued.
LatestAcquisitions
AcquisitionofDeutscheBank’sU.S.PrivateClientServicesUnitInDecemberof2015,as amethodof accelerating its expansionplans,Raymond Jamesagreed tobuyDeutscheBank’sU.S.-basedassetandwealthmanagementbusinesses.Thedealwillcloseinthethirdquarterof2016andwilladd$50billioninassetsunderadministration(AUA),$300millioninrevenue and200 additional advisers. The goal of this acquisition is to growRJF’s presence acrosscontinentalU.S.,mainlytheNortheastandWestCoast.Thecostsofthepurchasewillvaryaccordingtothenumberofadvisersthatendupjoining,however, ifall join,thetotalcouldbe$420million.This deal follows a trend seen in financial services recently,whereby foreign banking institutions,suchasDeutscheBank,aredivestingtheirU.S.wealthmanagementbusinesses(see“DepartmentofLaborFiduciaryRule”below).Givenrecentpositivemarketconditions,thesalewasmadeatagoodprice,especiallywhencomparingittotheMorganKeeganacquisitionandshouldaddroughly$0.13inEPS.
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AcquisitionofMorganKeeganIn2012,RaymondJamesacquiredMorganKeegan&Company,awealthmanagementandcapitalmarkets companywith $82 billion AUM, for $930million,which, asmentioned earlier, served toexpanditsfinancialadvisorybusiness.ThispurchasewasRJF’slargestto-dateandhascreatedoneofthe largest independent full-service wealthmanagement and capital markets firms in the UnitedStates. This transactionprovidedRJFwith900additional advisers,98%ofwho remainedwith thefirm,whichpointstostrongretention.
Risks
DepartmentofLabor(DOL)Fiduciary(“ConflictsofInterest”)RuleThe Department of Labor initially proposed a rule to address conflicts of interest in the financialadvisorybusiness.GivenRaymondJamesderivesasubstantiveamountofitsrevenuefromitsPCG(Private ClientGroup) segment, the implementation of such a law couldmarginally hurt revenue.The rule in itself would ensure that advisers have their clients’ best interest in mind and wouldeliminatebackdoorpaymentsandhiddenfeelsthataresupposedly“buriedinfineprint”,accordingto theDOL.A similar lawwaspassed in theUK,which led toadecline in thenumberof financialadvisersandwealthmanagementfirms.MajorfinancialinstitutionshavebeguntorestructuretheirU.S.-basedwealthmanagement and brokerage operations. These include Barclays, which sold itsventuretoStifelFinancial,WellsFargo,whichsignedarecruitmentagreementwithCreditSuisseforadvisers,andDeutscheBank,whichsolditsoperationstoRaymondJames.Theseallhaveoccurredinasimilartimeperiod,whichiscertainlyinterestingtonote.
That said, significant research indicated that this law has little chance of being successful asmembers of both political parties, and especially those of the Republican Party, including HouseSpeakerPaulRyan,havedecriedtheproposalasitcouldimpedethefinancialadvisorybusiness.Mr.Ryan is “determined todoeverythingpossible toprotect and stop this rule” as itwouldnotonly“createmore paperwork and record-keeping requirements for planners,meaning higher costs forconsumers”, but itwould also inhibit “up to 7million IRAs” from being qualified for advice. As aresult, thereareefforts to includemeasures inanappropriationsbill thatwouldblock funding fortherule.Further,asMr.RyanmentionsinanarticlehepennedinFebruaryof2016,“theWaysandMeansandEducationandWorkforcecommitteesapprovedRep.PeterRoskam’s(R-IL)StrengtheningAccess to Valuable Education and Retirement Support (SAVERS) Act, which would requirecongressionalapprovaloftheDOLrule.AsimilarmeasureofferedbyRep.PhilRoe(R-TN),AffordableRetirementAdviceProtectionAct, alsopassed the EducationandWorkforceCommittee. Together,thesebipartisanbillsprovideaworkablealternativetotheadministration’sflawedproposal.(Moreinformation:http://www.speaker.gov/general/one-rule-could-hurt-millions-middle-class-savers)”.
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MacroConditionsRaymondJames isaffectedbychanges in theeconomythat impact the financialmarkets. Interestrates, inflation, employment, economic output and monetary/fiscal policy all have a direct orindirectimpactonthecompany’sactivities.Likemostotherbusinesses,RJFoperatesincyclesand,asaresult,aneconomicdownturncanleadtolowerrevenueandprofitability.Nevertheless,basedonhistoricalperformance,Raymond James suffers less thandoother financial institutions,mainlydue to its conservative and risk-aversenature.Given recentmarket volatility, certain analysts arewarningagainstanimpedingU.S.recession.WhileIpersonallybelievethosethoughtsarebaseless,theycannotbeignored.RJF’sshort-termperformancewillbedictatedbymacroeconomicchanges.
ExposuretoEnergyRaymond James is directly exposed to the energy sector, having made loans to 32 energycompanies. Even though only one of those businesses was in the Exploration and Productionindustry, and is itself investment-grade, RJF hasmade over $443million in energy loans, totaling3.19%ofitsloanportfolioof$13.68billion.Givenmanagement’sconservativenature,thecompanyhasset$184millionasideinreservesfor$53.5millioninnon-performingloans.Ifitcametoit,RJFwouldbeabletomarkitsenergybookdownbyroughly50%withoutinfluencingitsbookmuch.
ContinuedPricingPressuresinCertainSegmentsOver the past couple of years, there have been significant pricing pressures in such segments asfixed income and equity trading,whereby tradingmargins and commissions have decreased. Thistrend has been industry-wide, as new platforms enter themarket and undercut current players.ThoughRaymondJamesisnotentirelydependentonthesetwogroups,theydorepresentaminorsourceofrevenuewithintheCapitalMarketsgroup.
ConclusionAsmentionedintheExecutiveSummary,beingagoodinvestormeansfindingoutstandingcompaniestobetonduringseeminglybadeconomictimes.TherecentmarketdownturnpresentsabuyingopportunityforRaymondJames,acompanywhosesolidfundamentalsreflectanundervaluedstockwithplentyofroomtorun.Whilenotvital,astrongereconomywillpushthestockhigherintheshortrunandunlockplentyofvaluewithinRJF’svarioussegments.Inthelongrun,greatereconomicactivity,increasingassetpricesandrisingratesshouldgeneratetoplinegrowthandleadtohigheroperatingmargins.Atthesametime,RaymondJames’ever-expandingoperationswillcontinuetodrivegrowthforyearstocome.
JohnDucasMarch102016__________________________________________________________________________________________
20
CollatedAnnualFinancialDataSince2008*Whereapplicable,numbersinmillions.CurrencyinUSDIncomeStatement
Income Statement (Annual) 9/30/15 9/30/14 9/30/13 9/30/12 9/30/11 9/30/10 9/30/09 9/30/08
Income (Annual)
Operating Revenue 5200.21 4861.369 4485.427 3806.53
1 3334.0
56 2916.6
65 2545.5
66 2812.7
03
Excise Taxes
Fees
Revenue 5200.21 4861.369 4485.427 3806.53
1 3334.0
56 2916.6
65 2545.5
66 2812.7
03
Cost of Goods Sold
Gross Profit
Development Expense 118.712
Sales and Marketing Expense 121.95
7 200.27
3 219.32
8
General and Administrative Expense 3851.343 3617.741 3348.505 2845.16
3 2533.3
15 2020.2
61 1730.0
11 1988.4
76
SG&A Expense 3851.343 3617.741 3348.505 2845.16
3 2533.3
15 2142.2
18 1930.2
84 2207.8
04
Research Expense
Development Expense 118.712
Research and Development Expense 118.712
Income Statement Depreciation
Amortization Expense
Amortization of Securities
Rent and Landing Expense
Investment Write Off
Asset Write Down
Special Income and Charges -183.642 -172.885 -218.358 -175.22 -169.28 0
Provision for Doubtful Accounts
Loss Settling Claims
Non Income Taxes
Operating Interest Expense
Operating Interest Income
Net Operating Interest Income
Other Operating Expenses
Total Operating Expenses 3667.701 3444.856 3130.147 2788.65
5 2364.0
35 2142.2
18 1930.2
84 2207.8
04
Operating Income 776.712 715.948 593.91 467.921 450.74
5 356.14
4 236.40
1 382.54
8
Non-Operating Interest Income
Non-Operating Interest Expense Net Non-Operating Interest Income Expense
Non-Operating Income
Other Income and Expenses
JohnDucasMarch102016__________________________________________________________________________________________
21
Net Interest Income 435.253 376.795 363.228 361.889 326.48
8 308.04
1 386.63
1 331.83
4
Pre-Tax Income 776.712 715.948 593.91 467.921 450.74
5 356.14
4 236.40
1 386.85
4
Provision for Income Taxes 296.034 267.797 197.033 175.656 182.89
4 133.62
5 96.024 151.77
6
Trust Preferred Security Payments
Income from Continuing Operations 480.678 448.151 396.877 292.265 267.85
1 222.51
9 140.37
7 235.07
8
Income from Discontinued Operations Extraordinary Items, Income Statement Income Attributable to Minority Interest 21.462 32.097 -29.723 3.604 10.502 5.764 12.373
Accounting Change
Preferred Stock Dividend
Net Income 502.14 480.248 367.154 295.869 278.35
3 228.28
3 152.75 235.07
8
Normalized Income 615.7891
64 588.4661
75 513.0704
99 405.311
99 388.38
5 228.28
3 152.75 235.07
8
EBITDA
Reconciled Depreciation 68.315 64.163 66.359 51.445 40.337 39.527 34.563 27.982
EBIT 884.666 820.039 704.281 559.29 516.57
5 418.99
5 293.35
4 779.08
3
Basic EPS (Annual) EPS Basic from Continuing
Operations 3.511308 3.410448 2.63548 2.26189
2 2.2732
34 1.9129
59 1.3034
61 2.0198
65 EPS Basic from Discontinued Operations
EPS Basic from Extraordinaries
EPS Basic from Accounting Change EPS Basic from Tax Loss Carryforward
EPS Basic from Other Gains / Loss
Normalized Basic EPS 4.308578 4.183794 3.694904 3.09857
3 3.1718
36 1.9129
59 1.3034
61 2.0198
65
EPS Basic 3.51 3.41 2.64 2.22 2.2 1.83 1.25 2.02
Diluted EPS (Annual) EPS Diluted from Continuing
Operations 3.429721 3.32366 2.582805 2.24498
6 2.2660
54 1.9088
48 1.3023
5 1.9744
66 EPS Diluted from Discontinued Operations
EPS Diluted from Extraordinaries
EPS Diluted from Accounting Change EPS Diluted from Tax Loss Carryforward
EPS Diluted from Other Gain/Loss
Normalized Diluted EPS 4.208465 4.077326 3.621054 3.07541
5 3.1618
17 1.9088
48 1.3023
5 1.9744
66
EPS Diluted 3.43 3.32 2.58 2.2 2.19 1.83 1.25 1.97
Shares Data (Annual)
Average Basic Shares Outstanding 142.548 139.935 137.732 130.806 122.44
8 119.33
5 117.18
8 116.38
3
Average Diluted Shares Outstanding 145.939 143.589 140.541 131.791 122.83
6 119.59
2 117.28
8 119.05
9
Dividend Per Share 0.72 0.64 0.56 0.52 0.52 0.44 0.44 0.44
JohnDucasMarch102016__________________________________________________________________________________________
22
BalanceSheet
Balance Sheet (Annual) 9/30/15 9/30/14 9/30/13 9/30/12 9/30/11 9/30/10 9/30/09 9/30/08
Assets (Annual)
Cash
2597.568
2195.683 2593.89
1973.897
Cash and Equivalents 2601.00
6 2199.06
3 2723.02
1 2143.86
8 2439.69
5 2943.23
9 2306.08
5 3207.49
3
Short Term Investments 76.488 83.799 94.242
Cash and Short Term Investments 2601.00
6 2199.06
3 2723.02
1 2143.86
8 2439.69
5 3019.72
7 2389.88
4 3301.73
5
Accounts Receivable 2067.11
7
Loans Receivable
Notes Receivable
Other Receivables 853.107
Total Receivables 2958.55
9 2937.08
8 2780.51
9 2920.22
4 2574.84
9 2525.27
3 2458.74
5 3056.97
9
Raw Materials Inventory
Work in Process Inventory
Finished Goods Inventory
Purchased Components Inventory
Other Inventory
Inventories
Prepaid Expenses 705.391 655.256 611.425 605.566 363.221 451.357 260.427 287.836
Restricted Cash
Current Deferred Tax Assets
Other Current Assets
Total Current Assets 6264.95
6 5791.40
7 6114.96
5 5669.65
8 5377.76
5 5996.35
7 5109.05
6 6646.55
Properties
Land and Improvements 20.104 20.104 20.104 19.754 18.644 18.644 18.644 18.644
Buildings and Improvements 241.457 234.104 235.239 204.593 180.392 174.68 171.411 158.615
Machine, Furniture & Equipment 369.179 328.154 331.17 299.772 234.421 207.437 204.358 190.435
Other Properties
Construction in Progress 5.973 3.295 0.707 6.782 2.237 2.111 1.325 4.866
Leases
Gross PP&E 636.713 585.657 587.22 530.901 435.694 407.457 399.758 385.841
Accumulated D&A -
380.838 -
340.256 -
342.804 -
299.706 -
265.844 -
236.689 -
213.526 -
193.391
Net PP&E 255.875 245.401 244.416 231.195 169.85 170.768 186.232 192.45
Goodwill 307.635 295.486 295.486 300.111 71.924 62.575 62.575 62.575
Other Intangible Assets 69.327 58.775 65.978 61.135 1.043
Goodwill and Intangibles 376.962 354.261 361.464 361.246 72.967 62.575 62.575 62.575
Gross Loans 13681.4
62 11574.3
34 18214.1
92 8655.24
8 6739.07
5 6094.92
9 6593.97
3 7095.22
7
Allow for Loan/Lease Loss 172.257 147.574 136.501 147.541 145.744
Unearned Income -32.424 -37.533 -70.698 -45.417
JohnDucasMarch102016__________________________________________________________________________________________
23
Net Loan Assets 13476.7
81 11389.2
27 18077.6
91 8437.00
9 6547.91
4 6094.92
9 6593.97
3 7095.22
7
Long Term Investments 1861.79
8 1904.95
7 2015.54
8 2485.49 1628.17
6 1694.36
5 1585.84
5 1435.81
2
Long Term Notes Receivable
Long Term Receivables
Derivative Instruments
Long Term Deferred Assets
Long Term Deferred Tax Assets 266.899 231.325 195.16 168.187 171.911 165.208 156.399 108.765
Long Term Deferred Charges
Pension Asset
Other Long Term Assets
Total Long Term Assets 15971.4
16 13893.8
46 20699.1
19 11514.9
4 8418.90
7 8022.63
7 8428.62
5 8786.06
4
Total Assets 26479.6
84 23325.6
52 23186.1
22 21160.2
65 18006.9
95 17883.0
81 18226.7
28 20709.6
16
Liabilities (Annual)
Accounts Payable
4835.127
4172.634
6052.454 4687.82 111.408
Dividends Payable
Current Tax Payable
Other Payables 1207.81
8 1180.61
8 984.721 1052.25
3 5505.00
3
Total Payables 6042.94
5 5353.25
2 7037.17
5 5740.07
3 5616.41
1 11513.8
1 14038.2
98 15681.3
35
Accrued Expenses
Payables and Accrued Expenses 6042.94
5 5353.25
2 7037.17
5 5740.07
3 6378.98
3 11513.8
1 14038.2
98 15681.3
35
Current Provisions - Legal & Other
Notes Payable
Commercial Paper Liability
Liability on Credit Line
Other Current Borrowings
Current Portion of Long Term Debt
Current Capital Lease Obligation
Current Debt & Capital Lease Obligation
Current Deferred Revenue
Current Deferred Liabilities
Current Deferred Tax Liability
Other Current Liability
Total Current Liabilities 6042.94
5 5353.25
2 7037.17
5 5740.07
3 6378.98
3 11513.8
1 14038.2
98 15681.3
35
Long Term Provisions - Legal & Other
Non-Current Portion of Long Term Debt 1878.24
7 1889.62
9 1341.52
2 1410.80
6 711.95 2989.42
8 1428.27
8 2314.78
8
Long Term Cap Lease Obligation Non-Current Portion of LTD and Capital Lease Obligation
1878.247
1889.629
1341.522
1410.806 711.95
2989.428
1428.278
2314.788
Long Term Deferred Tax Liabilities
Non-Current Deferred Revenue
Non-Current Deferred Liabilities
Non-Current Accrued Expenses 418.591 330.879 345.782
JohnDucasMarch102016__________________________________________________________________________________________
24
Total Deposits 11919.8
81 10028.9
24 9295.37
1 8599.71
3 7739.32
2
Security Sold Not Yet Repurchased
Unpaid Loss Reserve
Unearned Premium on Insurance Contract
Pension Liability 842.527 814.359 741.787 690.654
Derivative Contract Liabilities 389.457 323.337 250.341 458.265 0
Minority Interest Ownership 264.067 292.02 335.413 411.342 324.226 294.052 200.676 237.322
Trust Preferred Securities Preferred Securities out of Shareholders Equity
Restricted Common Stock
Other Long Term Liabilities
Total Long Term Liabilities 15294.1
79 13348.2
69 11964.4
34 11570.7
8 8775.49
8 3702.07
1 1959.83
3 2897.89
2
Total Liabilities 21957.6
53 19184.4
16 19523.1
98 17891.3
25 15419.3
76 15580.2
65 16194.2
65 18825.7
11
Shareholder's Equity (Annual)
Total Capital Stock 1.491 1.444 1.429 1.404 1.271 4.363 4.425 1.202
Retained Earnings 3419.71
9 3023.84
5 2635.02
6 2346.56
3 2125.81
8 1909.86
5 1737.59
1 1639.66
2
Additional Paid In Capital 1344.77
9 1239.04
6 1136.29
8 1030.28
8 565.135 476.359 416.662 355.274
Treasury Stock 203.455 121.211 120.555 118.762 95 81.574 84.412 81.761
Preferred Stock 0 0 0 0 0 0 0
Unrealized Gain or Loss - Total
Minimum Pension Liabilities Adjustments for Foreign Currency Translation
Other Equity Adjustments
Accrued Comprehensive Inc -40.503 -1.888 10.726 9.447 -9.605 -6.197 -41.803 -33.976 Employee Stock Option Plan Debt Guarantee
Shareholders Equity 4522.03
1 4141.23
6 3662.92
4 3268.94 2587.61
9 2302.81
6 2032.46
3 1883.90
5
CashFlowCash Flow Statement (Annual) 9/30/15 9/30/14 9/30/13 9/30/12 9/30/11 9/30/10 9/30/09 9/30/08
Cash Flow - Operations (Annual)
Net Income 502.14 480.248 367.154 295.869 267.851 228.283 152.75 235.078
Net Income Disc. Operations
Extraordinary Items, Cash Flow
Cumulative Effect of Acct. Change
Gain/Loss on Sale Business
Gain and Loss on Sale of PPE Net Foreign Currency Exchange Gain/Loss
Gain (Loss) on Investment Securities
Earnings Loss from Eq. Investments
JohnDucasMarch102016__________________________________________________________________________________________
25
Pension and Employee Expense
Operating Gains Losses 16.86
Depreciation Expense
Amortization Expense CF
Total Depreciation and Amortization 68.315 64.163 66.359 51.445 40.337 39.527 34.563 27.982 Total Depreciation, Amortization, Depletion 68.315 64.163 66.359 51.445 40.337 39.527 34.563 27.982
Deferred Taxes -23.462 -35.171 -31.789 2.044 -6.008 -25.829 -44.671 32.422
Amortization of Securities -14.969 -11.863
Asset Impairment Charge 0 0 6.933 0 0 4.904
Unrealized Gain (Loss) on Investment Securities
Stock Based Compensation 71.488 69.609 61.862 55.729 40.978 41.845 31.746 42.127 Excess Tax Benefit from Stock Compensation 8.115 -7.437 -2.59 -2.613 -2.106 -2.28
Other Noncash Items 120.863 101.125 31.531 76.601 128.76 215.446 206.259 115.795
Change in Receivables -56.394 -
159.562 88.162 144.047 -70.499 335.693 460.545
Change in Inventories
Change in Prepaid Assets 46.896 19.33 -66.448 12.914 -13.418 -79.969 0.814 -
187.682
Change in Payables and Accrued Expense 623.222
-1728.66
3 1357.92
5 -364.88 1346.37
9 -
371.926
-2107.26
2 -
343.685
Change in Other Current Assets -
356.147 1782.22
9
-1471.83
5 782.904 -
133.687
-1163.18
9 1809.55
6 -
200.391
Change in Other Current Liabilities
Change in Other Working Cap -
220.476
Changes in Working Capital 312.421 -
116.492 155.66 -12.23 1266.06
-1473.05
6 12.613 -
275.075
Other Cash from Operations
Cash from Operations 899.177 507.587 659.805 391.289 1558.44
1
-1021.39
3 374.159 135.658
Cash Flow - Investing (Annual)
Net Change in Capital Expenditures -74.111 -60.149 -72.879 -77.515 -37.2 -22.287 -35.539 -51.043
Sale of PPE
Net Change in PP&E -74.111 -60.149 -72.879 -77.515 -37.2 -22.287 -35.539 -51.043
Net Change in Intangibles
Net Technology Purchase and Sale
Net Divestitures (Acquisitions)
-1073.62
1 0 0 0
Total Net Change in Investments 17.483 195.871 289.262 -
159.697 -88.137 86.413 -24.003 -
153.297
Net Other Investing Changes -22.201 -24.454 -3.732 31.049 61.508 -28.596 7.32
Cash from Investing
-2167.95
9
-2096.76
4 -
651.974
-2731.21
5 -
400.143 2366.22
1
-1026.08
4
-2784.61
9
Cash Flow - Financing (Annual)
Net Change in Long Term Debt 21.374 474.517 -152.51 713.296
-2335.50
5 1556.93 -
876.097 2089.58
4
Net Change in Short Term Debt -34.7 70.624 79.076
JohnDucasMarch102016__________________________________________________________________________________________
26
Net Debt Issuance -13.326 545.141 -73.434 713.296
-2335.50
5 1556.93 -
876.097 2089.58
4
Common Stock Issuance 362.823 0 0
Common Stock Payments -88.542 -8.427 -11.718 -24.877 -23.111 -3.537 -4.339 -67.243 Net Common Equity Issued (Purchased) -88.542 -8.427 -11.718 337.946 -23.111 -3.537 -4.339 -67.243
Preferred Stock Issuance
Preferred Stock Payments Net Preferred Equity Issued (Purchased)
Total Common Dividends Paid -
103.143 -88.102 -76.593 -68.782 -63.09 -56.009 -54.14 -53.151
Total Preferred Dividends Paid
Total Dividends Paid -
103.143 -88.102 -76.593 -68.782 -63.09 -56.009 -54.14 -53.151
Proceeds from Stock Option Exercised 47.964 33.633 55.997 33.811 47.383 19.917 25.022 32.594
Proceeds from Issued Warrants
Cash from Other Financing Activities -8.005 8.163 25.522 2.613 35.335 114.19 18.808 21.73
Cash from Financing 1725.90
5 1223.96
1 615.432 1879.27
5
-1679.38
4 -
712.178 -
241.816 5212.71
2
Ending Cash (Annual)
Beginning Cash
2199.063
2596.616 1980.02
2439.695
2943.239
2306.085
3207.493 644.943
Change in Cash 401.943 -
397.553 616.596 -
459.675 -
503.544 637.154 -
901.408 2562.55
Cash Foreign Exchange Adjustment -55.18 -32.337 -6.667 0.976 -0.824 1.116 -1.45 -1.201
Ending Cash 2601.00
6 2199.06
3 2596.61
6 1980.02 2439.69
5 2943.23
9 2306.08
5 3207.49
3
Additional Items (Annual)
Cash from Discontinued Operations Adjustment -6.217
Issuance of Capital Stock 362.823 0 0
Issuance of Debt 550.299 500.367 5 30.546 249.498 1607 327.043 2095
Debt Repayment -
528.925 -25.85 -157.51 -23.145
-2585.00
3 -50.07 -
1203.14 -5.416
Repurchase of Capital Stock -88.542 -8.427 -11.718 -24.877 -23.111 -3.537 -4.339 -67.243
Income Tax Paid Supplemental Data 378.928 319.279 189.73 176.539 194.233 161.345 137.618 134.783
Interest Paid Supplemental Data 106.313 101.09 106.818 91.453 55.332 59.584 58.774 396.693
Domestic Sales 4911.30
4
Foreign Sales 396.86
JohnDucasMarch102016__________________________________________________________________________________________
27
DisclaimerJohnDucas(“TheAuthor”)isnotaregisteredinvestmentadviserdoesnotpurporttotellorsuggestwhichsecuritiesyoushouldbuyorsellforyourself.Youunderstandandacknowledgethatthereisaveryhighdegreeofriskinvolvedintradingsecurities.Theauthorassumesnoresponsibilityorliabilityforyourtradingandinvestmentresults.Itshouldnotbeassumedthatthemethods,techniques,orindicatorspresentedinthisarticlewillbeprofitableorthattheywillnotresultinlosses.Thisarticleisprovidedforinformationalandeducationalpurposesonlyandshouldnotbeconstruedasinvestmentadvice.Thearticleisnotasolicitationofanyordertobuyorsell.Youshouldalwayscheckwithyourlicensedfinancialadviserandtaxadvisertodeterminethesuitabilityofanyinvestment.
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