- This article examines whether Raymond James Financial at around US$144.20 is offering good value or is priced too high, and walks through what the current price might imply.
- The stock is up 0.9% over the last 7 days, while the 30 day and year to date returns of a 7.3% decline and an 11.9% decline compare with a 1 year return of 2.4% and a 3 year gain of 63.5% that extends to 82.9% over 5 years.
- Recent coverage has focused on Raymond James Financial's role within the broader capital markets sector and how investor sentiment has been shifting around interest rate expectations and deal activity. This context helps explain why shorter term returns look different to the longer term record.
- On Simply Wall St's valuation checks, Raymond James Financial currently scores 6 out of 6. The sections that follow compare what different valuation methods indicate about that score, and then offer a perspective that can help you interpret valuation in a more rounded way.
Find out why Raymond James Financial's 2.4% return over the last year is lagging behind its peers.
Approach 1: Raymond James Financial Excess Returns Analysis
The Excess Returns model looks at how much profit a company can generate over and above the return that shareholders require, and then capitalizes those “excess” profits into an intrinsic value per share.
For Raymond James Financial, the model uses a Book Value of $63.40 per share and a Stable EPS of $14.28 per share, based on weighted future Return on Equity estimates from 6 analysts. The Average Return on Equity is 19.37%, compared with a Cost of Equity of $6.03 per share. That gap translates into an Excess Return of $8.25 per share. The Stable Book Value input of $73.72 per share comes from weighted future Book Value estimates from 5 analysts.
These inputs feed into an Excess Returns valuation of about $246.33 per share, which implies a 41.5% discount to the recent share price around $144.20. On this model, Raymond James Financial screens as materially undervalued at current levels.
Result: UNDERVALUED
Our Excess Returns analysis suggests Raymond James Financial is undervalued by 41.5%. Track this in your watchlist or portfolio, or discover 61 more high quality undervalued stocks.
Approach 2: Raymond James Financial Price vs Earnings
For profitable companies, the P/E ratio is a useful way to relate what you pay for each share to the earnings that support that price. A higher or lower P/E often reflects what the market is willing to pay today for each dollar of current earnings.
In general, higher expected earnings growth and lower perceived risk can justify a higher P/E, while slower growth and higher risk usually support a lower, more conservative P/E. That context matters when you compare Raymond James Financial with the broader Capital Markets industry or with direct peers.
Raymond James Financial currently trades on a P/E of 13.60x. This sits below the Capital Markets industry average P/E of 30.19x and below the peer average of 19.41x. Simply Wall St’s Fair Ratio framework estimates what a “normal” P/E might be for Raymond James Financial at 15.28x, based on factors such as earnings growth, profit margins, industry, market value and company specific risks.
Because Fair Ratio incorporates those fundamentals, it can be more informative than a simple comparison with industry or peer averages. With the current P/E of 13.60x below the Fair Ratio of 15.28x, the shares screen as undervalued on this metric.
Result: UNDERVALUED
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.
Upgrade Your Decision Making: Choose your Raymond James Financial Narrative
Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St help you turn your view of Raymond James Financial into a clear story that links drivers like advisor recruitment, AI initiatives or buybacks to a set of revenue, earnings and margin forecasts. They then translate those forecasts into a fair value and compare that fair value with the current price so you can judge whether the stock looks expensive or cheap for your assumptions. That view is then updated automatically when new earnings, news or analyst targets arrive. This is why some investors in the Community page may lean toward a higher fair value closer to the US$184.83 estimate, while others lean lower if they put more weight on risks such as execution, interest rate uncertainty or technology spending.
Do you think there's more to the story for Raymond James Financial? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com