Raymond James Financial, Inc. RJF

Key data

The business

Raymond James is a broker-dealer and wealth manager built around a bank. About 19,500 employees stand behind roughly 8,700 financial advisors, many of them independent contractors who run their own practices under the Raymond James name and keep their clients' money on its platform. The company makes money three ways. First and largest, fees on the client money those advisors oversee, which rise and fall with markets and with how many advisors it can recruit. Second, interest at Raymond James Bank, which lends against securities and real estate and earns a spread on the cash clients leave idle in their accounts. Third, its capital-markets arm, which underwrites stock and bond deals and advises on acquisitions, the most cyclical and smallest of the three. The moat is the advisor relationship: an advisor who joins brings years of client trust, moving is disruptive for advisor and client both, so once recruited they tend to stay and the assets stay with them. A client would recognize the quarterly statement and the advisor down the street. The bank, bolted on over the last decade, is what turned idle client cash into a second real engine.

The numbers

The sequence runs up and to the right with one wobble worth naming.

Revenue rose every quarter across the last five, and diluted earnings went from $2.12 to $3.01, up 42% against the same quarter a year earlier. The June 2025 quarter was the soft one at $436M, held down by a weaker capital-markets and a one-off cost line, and everything since has stepped up. The caution is the March 2026 quarter, where profit slipped to $544M even as revenue rose, a reminder that costs here do not always follow the top line.

Across the five fiscal years revenue compounded about 13% a year and diluted earnings about 12%, while the share count fell 4% over the most recent three, so per-share earnings grew a little faster than the business. Return on equity sits at 18.3%. But here is the number the story explains least well: net margin has held near 13.5% every year since FY2023 despite revenue climbing 24%. Advisor payouts rise with the revenue those advisors generate, so a large share of every new dollar passes straight back out the door. What this memo believes and the tape does not fully price is that the compounding is real but shallower than the headline growth implies, and the print that settles it is whether margin finally widens when the September quarter closes the year.

One table tells the rate story better than any sentence.

Interest income more than tripled into FY2023 as rates climbed, then flattened near $2.1B for two years. That plateau is the whole rate-sensitivity question in one line: the annuity is large and durable at today's rates, and exposed the day they fall.

Management

Insiders sold about $9.1M over the past year across five sales with no buys, but that is 0.03% of the company and reads as routine trimming by operating executives, not a signal, though the vendor gives no split between planned and discretionary to confirm it. The record that matters is capital allocation: buybacks rose from $150M in FY2021 to $1.27B in FY2025, done at average prices between $88 and $157, below today's $178, so far accretive. Reported earnings came in above analyst estimates in each of the last four quarters. Paul Shoukry stepped up from CFO to CEO; the pay disclosure in this bundle is stale at FY2022 and says little about the current seat.

How it fails or surprises you

Rate cuts drain the cash annuity. Net interest income has plateaued near $2.1B and lives on the gap between what the bank earns and what it pays. If the Fed cuts through 2027, that gap narrows and clients sweep idle cash toward higher-yielding options at the same moment, hitting the line from both sides. The print that shows it first: net interest income and bank deposit balances in the next two quarterly releases.

Recruiting into high markets compounds the fees (right tail). Asset-based fees are the group's cleanest annuity, and they grow with advisor headcount and with the market itself. If markets hold and net recruiting continues at its recent pace, fee income compounds faster than a flat 15x multiple assumes. The print: advisor count and fee-based asset balances quarter over quarter.

The margin that never widens. Revenue grew 24% from FY2023 to FY2025, net income grew 23%, and net margin sat at about 13.5% the whole way. If the fiscal Q4 print shows margin still pinned there while revenue climbs, the operating leverage the bulls are paying for is not arriving, and the compounding is exactly as slow as the pass-through implies.

Closing thoughts

This is a steady grower trading near its richest multiple in a decade and a few dollars under its all-time high. Most of what it does is already priced: the name is well-covered, and the buyer at 15.5x is paying for durability, not discovery. The swing factor is the cash annuity, which cuts both ways with rates. The left tail is a market drawdown that hits fee assets and interest income together, the one stretch where both engines stall at once, and it is the tail worth respecting most because it is the permanent-loss version. The right tail is thinner but real: continued recruiting into high markets. Judgment, not arithmetic: the distribution is mildly right-skewed and capped by the entry price.

The bet stays that advisors keep choosing Raymond James and their clients keep their money here. What breaks it is the two numbers to watch together, net new client assets and net interest income. The fiscal year-end print, the September quarter that would show whether new assets kept arriving above $20B and client cash stayed put, has not been filed yet, so that watch is still open rather than answered. It breaks the day advisors start leaving or clients start moving cash out, and those two lines will show it before the price does.