Intrinsic value of Raymond James Financial - RJF

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$73.21

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$73.21

 
Intrinsic value

$483.60

 
Up/down potential

+561%

 
Rating

str. buy

 
Value-price divergence* premium content

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Our model is not good at valuating stocks of financial companies, such as RJF.

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of RJF stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 10.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  3.99
  17.50
  16.25
  15.13
  14.11
  13.20
  12.38
  11.64
  10.98
  10.38
  9.84
  9.36
  8.92
  8.53
  8.18
  7.86
  7.57
  7.32
  7.08
  6.88
  6.69
  6.52
  6.37
  6.23
  6.11
  6.00
  5.90
  5.81
  5.73
  5.65
  5.59
Revenue, $m
  5,520
  6,486
  7,540
  8,680
  9,905
  11,213
  12,601
  14,069
  15,613
  17,234
  18,930
  20,702
  22,549
  24,472
  26,474
  28,554
  30,717
  32,964
  35,300
  37,727
  40,250
  42,874
  45,605
  48,446
  51,405
  54,488
  57,701
  61,052
  64,549
  68,199
  72,010
Variable operating expenses, $m
 
  5,532
  6,424
  7,390
  8,427
  9,534
  10,709
  11,951
  13,259
  14,631
  16,067
  17,526
  19,090
  20,718
  22,413
  24,174
  26,005
  27,908
  29,885
  31,940
  34,076
  36,298
  38,609
  41,015
  43,520
  46,130
  48,850
  51,688
  54,648
  57,737
  60,964
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  4,743
  5,532
  6,424
  7,390
  8,427
  9,534
  10,709
  11,951
  13,259
  14,631
  16,067
  17,526
  19,090
  20,718
  22,413
  24,174
  26,005
  27,908
  29,885
  31,940
  34,076
  36,298
  38,609
  41,015
  43,520
  46,130
  48,850
  51,688
  54,648
  57,737
  60,964
Operating income, $m
  777
  954
  1,116
  1,291
  1,479
  1,679
  1,892
  2,117
  2,354
  2,603
  2,863
  3,175
  3,459
  3,754
  4,061
  4,380
  4,712
  5,056
  5,415
  5,787
  6,174
  6,577
  6,995
  7,431
  7,885
  8,358
  8,851
  9,365
  9,901
  10,461
  11,046
EBITDA, $m
  849
  1,026
  1,193
  1,373
  1,567
  1,774
  1,994
  2,226
  2,470
  2,726
  2,995
  3,275
  3,567
  3,872
  4,188
  4,517
  4,859
  5,215
  5,584
  5,968
  6,368
  6,783
  7,215
  7,664
  8,132
  8,620
  9,128
  9,659
  10,212
  10,789
  11,392
Interest expense (income), $m
  114
  112
  338
  585
  852
  1,139
  1,445
  1,770
  2,114
  2,475
  2,855
  3,252
  3,667
  4,099
  4,550
  5,018
  5,505
  6,012
  6,538
  7,085
  7,653
  8,244
  8,858
  9,498
  10,163
  10,856
  11,578
  12,330
  13,115
  13,933
  14,788
Earnings before tax, $m
  777
  842
  777
  706
  626
  540
  447
  347
  240
  127
  8
  -77
  -208
  -345
  -489
  -638
  -794
  -955
  -1,123
  -1,298
  -1,479
  -1,667
  -1,863
  -2,066
  -2,278
  -2,498
  -2,727
  -2,965
  -3,213
  -3,472
  -3,742
Tax expense, $m
  271
  227
  210
  191
  169
  146
  121
  94
  65
  34
  2
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  529
  615
  568
  515
  457
  394
  326
  253
  175
  93
  6
  -77
  -208
  -345
  -489
  -638
  -794
  -955
  -1,123
  -1,298
  -1,479
  -1,667
  -1,863
  -2,066
  -2,278
  -2,498
  -2,727
  -2,965
  -3,213
  -3,472
  -3,742

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,650
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  31,487
  35,059
  40,757
  46,921
  53,543
  60,611
  68,115
  76,046
  84,395
  93,156
  102,325
  111,901
  121,886
  132,283
  143,100
  154,347
  166,037
  178,185
  190,808
  203,929
  217,569
  231,754
  246,511
  261,871
  277,866
  294,530
  311,899
  330,013
  348,912
  368,641
  389,243
Adjusted assets (=assets-cash), $m
  29,837
  35,059
  40,757
  46,921
  53,543
  60,611
  68,115
  76,046
  84,395
  93,156
  102,325
  111,901
  121,886
  132,283
  143,100
  154,347
  166,037
  178,185
  190,808
  203,929
  217,569
  231,754
  246,511
  261,871
  277,866
  294,530
  311,899
  330,013
  348,912
  368,641
  389,243
Revenue / Adjusted assets
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
Average production assets, $m
  211
  246
  287
  330
  376
  426
  479
  535
  593
  655
  719
  787
  857
  930
  1,006
  1,085
  1,167
  1,253
  1,341
  1,434
  1,530
  1,629
  1,733
  1,841
  1,953
  2,071
  2,193
  2,320
  2,453
  2,592
  2,736
Working capital, $m
  0
  -1,712
  -1,991
  -2,292
  -2,615
  -2,960
  -3,327
  -3,714
  -4,122
  -4,550
  -4,998
  -5,465
  -5,953
  -6,461
  -6,989
  -7,538
  -8,109
  -8,703
  -9,319
  -9,960
  -10,626
  -11,319
  -12,040
  -12,790
  -13,571
  -14,385
  -15,233
  -16,118
  -17,041
  -18,004
  -19,011
Total debt, $m
  2,482
  6,905
  11,941
  17,390
  23,244
  29,492
  36,126
  43,137
  50,517
  58,262
  66,367
  74,833
  83,659
  92,850
  102,413
  112,355
  122,689
  133,427
  144,587
  156,185
  168,243
  180,782
  193,828
  207,406
  221,545
  236,276
  251,631
  267,644
  284,351
  301,790
  320,003
Total liabilities, $m
  26,570
  30,993
  36,029
  41,478
  47,332
  53,580
  60,214
  67,225
  74,605
  82,350
  90,455
  98,921
  107,747
  116,938
  126,501
  136,443
  146,777
  157,515
  168,675
  180,273
  192,331
  204,870
  217,916
  231,494
  245,633
  260,364
  275,719
  291,732
  308,439
  325,878
  344,091
Total equity, $m
  4,917
  4,067
  4,728
  5,443
  6,211
  7,031
  7,901
  8,821
  9,790
  10,806
  11,870
  12,981
  14,139
  15,345
  16,600
  17,904
  19,260
  20,669
  22,134
  23,656
  25,238
  26,883
  28,595
  30,377
  32,232
  34,165
  36,180
  38,282
  40,474
  42,762
  45,152
Total liabilities and equity, $m
  31,487
  35,060
  40,757
  46,921
  53,543
  60,611
  68,115
  76,046
  84,395
  93,156
  102,325
  111,902
  121,886
  132,283
  143,101
  154,347
  166,037
  178,184
  190,809
  203,929
  217,569
  231,753
  246,511
  261,871
  277,865
  294,529
  311,899
  330,014
  348,913
  368,640
  389,243
Debt-to-equity ratio
  0.505
  1.700
  2.530
  3.200
  3.740
  4.190
  4.570
  4.890
  5.160
  5.390
  5.590
  5.760
  5.920
  6.050
  6.170
  6.280
  6.370
  6.460
  6.530
  6.600
  6.670
  6.720
  6.780
  6.830
  6.870
  6.920
  6.950
  6.990
  7.030
  7.060
  7.090
Adjusted equity ratio
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116
  0.116

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  529
  615
  568
  515
  457
  394
  326
  253
  175
  93
  6
  -77
  -208
  -345
  -489
  -638
  -794
  -955
  -1,123
  -1,298
  -1,479
  -1,667
  -1,863
  -2,066
  -2,278
  -2,498
  -2,727
  -2,965
  -3,213
  -3,472
  -3,742
Depreciation, amort., depletion, $m
  72
  72
  77
  83
  88
  95
  101
  108
  116
  124
  132
  100
  108
  118
  127
  137
  148
  159
  170
  181
  194
  206
  219
  233
  247
  262
  278
  294
  310
  328
  346
Funds from operations, $m
  -1,306
  687
  645
  598
  546
  489
  428
  362
  291
  217
  138
  23
  -100
  -228
  -362
  -501
  -646
  -797
  -953
  -1,116
  -1,285
  -1,461
  -1,644
  -1,833
  -2,031
  -2,236
  -2,449
  -2,671
  -2,903
  -3,144
  -3,396
Change in working capital, $m
  -788
  -255
  -278
  -301
  -323
  -345
  -367
  -387
  -408
  -428
  -448
  -468
  -488
  -508
  -528
  -549
  -571
  -593
  -617
  -641
  -666
  -693
  -721
  -750
  -781
  -814
  -848
  -885
  -923
  -964
  -1,006
Cash from operations, $m
  -518
  827
  923
  899
  869
  834
  794
  749
  699
  645
  586
  491
  388
  280
  167
  48
  -75
  -203
  -337
  -476
  -619
  -768
  -923
  -1,083
  -1,249
  -1,422
  -1,601
  -1,787
  -1,980
  -2,181
  -2,389
Maintenance CAPEX, $m
  0
  -27
  -31
  -36
  -42
  -48
  -54
  -61
  -68
  -75
  -83
  -91
  -100
  -108
  -118
  -127
  -137
  -148
  -159
  -170
  -181
  -194
  -206
  -219
  -233
  -247
  -262
  -278
  -294
  -310
  -328
New CAPEX, $m
  -122
  -36
  -40
  -43
  -47
  -50
  -53
  -56
  -59
  -62
  -64
  -67
  -70
  -73
  -76
  -79
  -82
  -85
  -89
  -92
  -96
  -100
  -104
  -108
  -112
  -117
  -122
  -127
  -133
  -139
  -145
Cash from investing activities, $m
  -2,982
  -63
  -71
  -79
  -89
  -98
  -107
  -117
  -127
  -137
  -147
  -158
  -170
  -181
  -194
  -206
  -219
  -233
  -248
  -262
  -277
  -294
  -310
  -327
  -345
  -364
  -384
  -405
  -427
  -449
  -473
Free cash flow, $m
  -3,500
  765
  852
  819
  781
  737
  688
  633
  573
  508
  438
  332
  218
  99
  -27
  -158
  -295
  -437
  -584
  -738
  -897
  -1,062
  -1,233
  -1,410
  -1,595
  -1,786
  -1,985
  -2,192
  -2,406
  -2,630
  -2,862
Issuance/(repayment) of debt, $m
  2,776
  4,616
  5,036
  5,449
  5,854
  6,248
  6,634
  7,011
  7,380
  7,745
  8,105
  8,465
  8,826
  9,191
  9,562
  9,942
  10,334
  10,739
  11,159
  11,598
  12,058
  12,539
  13,046
  13,578
  14,139
  14,731
  15,355
  16,013
  16,707
  17,440
  18,213
Issuance/(repurchase) of shares, $m
  -119
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,692
  4,616
  5,036
  5,449
  5,854
  6,248
  6,634
  7,011
  7,380
  7,745
  8,105
  8,465
  8,826
  9,191
  9,562
  9,942
  10,334
  10,739
  11,159
  11,598
  12,058
  12,539
  13,046
  13,578
  14,139
  14,731
  15,355
  16,013
  16,707
  17,440
  18,213
Total cash flow (excl. dividends), $m
  -838
  5,380
  5,888
  6,268
  6,634
  6,985
  7,321
  7,643
  7,953
  8,253
  8,544
  8,798
  9,045
  9,290
  9,535
  9,784
  10,039
  10,302
  10,575
  10,861
  11,161
  11,478
  11,813
  12,168
  12,545
  12,945
  13,370
  13,821
  14,301
  14,810
  15,350
Retained Cash Flow (-), $m
  -395
  -607
  -661
  -715
  -768
  -820
  -871
  -920
  -968
  -1,016
  -1,064
  -1,111
  -1,158
  -1,206
  -1,255
  -1,305
  -1,356
  -1,409
  -1,464
  -1,522
  -1,582
  -1,645
  -1,712
  -1,782
  -1,855
  -1,933
  -2,015
  -2,101
  -2,192
  -2,288
  -2,390
Prev. year cash balance distribution, $m
 
  1,457
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  6,230
  5,227
  5,553
  5,866
  6,165
  6,451
  6,724
  6,985
  7,236
  7,480
  7,687
  7,886
  8,084
  8,281
  8,480
  8,683
  8,893
  9,111
  9,339
  9,579
  9,832
  10,101
  10,386
  10,689
  11,012
  11,355
  11,720
  12,108
  12,521
  12,960
Discount rate, %
 
  4.80
  5.04
  5.29
  5.56
  5.83
  6.13
  6.43
  6.75
  7.09
  7.45
  7.82
  8.21
  8.62
  9.05
  9.50
  9.98
  10.48
  11.00
  11.55
  12.13
  12.74
  13.37
  14.04
  14.74
  15.48
  16.25
  17.07
  17.92
  18.82
  19.76
PV of cash for distribution, $m
 
  5,945
  4,737
  4,757
  4,725
  4,643
  4,515
  4,346
  4,141
  3,906
  3,647
  3,358
  3,060
  2,759
  2,462
  2,172
  1,896
  1,634
  1,392
  1,170
  970
  793
  639
  506
  394
  301
  226
  166
  120
  84
  58
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Raymond James Financial, Inc., a financial holding company, through its subsidiaries, engages in the underwriting, distribution, trading, and brokerage of equity and debt securities, and the sale of mutual funds and other investment products in the United States, Canada, Europe, and internationally. The company operates through Private Client Group, Capital Markets, Asset Management, RJ Bank, and Other segments. The Private Client Group segment provides securities brokerage services, including the sale of equities, mutual funds, fixed income products, and insurance products to their individual clients; and borrowing and lending of securities to and from other broker-dealers, financial institutions, and other counterparties. The Capital Markets segment offers securities brokerage, trading, and research services to institutions with a focus on sale of the United States and Canadian equities and fixed income products; and manages and participates in underwritings, merger and acquisition services, and public finance activities. The Asset Management segment engages in the operations of Eagle, the Eagle Family of Funds, Cougar, the asset management operations of Raymond James & Associates, trust services of Raymond James Trust, and other fee-based asset management programs. The RJ Bank segment originates and purchases commercial and industrial loans, tax-exempt loans, securities based loans, and commercial and residential real estate loans. The Other segment engages in principal capital and private equity activities, including various direct and third party private equity investments; employee investment funds; and private equity funds. Raymond James Financial, Inc. was founded in 1962 and is headquartered in St. Petersburg, Florida.

FINANCIAL RATIOS  of  Raymond James Financial (RJF)

Valuation Ratios
P/E Ratio 19.6
Price to Sales 1.9
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow -20
Price to Free Cash Flow -16.2
Growth Rates
Sales Growth Rate 4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 64.9%
Cap. Spend. - 3 Yr. Gr. Rate 10.8%
Financial Strength
Quick Ratio 9
Current Ratio NaN
LT Debt to Equity 46.6%
Total Debt to Equity 50.5%
Interest Coverage 8
Management Effectiveness
Return On Assets 2.1%
Ret/ On Assets - 3 Yr. Avg. 2.2%
Return On Total Capital 7.5%
Ret/ On T. Cap. - 3 Yr. Avg. 7.9%
Return On Equity 11.2%
Return On Equity - 3 Yr. Avg. 11.7%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 96.8%
Gross Margin - 3 Yr. Avg. 96.8%
EBITDA Margin 17.4%
EBITDA Margin - 3 Yr. Avg. 17.7%
Operating Margin 14.1%
Oper. Margin - 3 Yr. Avg. 14.4%
Pre-Tax Margin 14.1%
Pre-Tax Margin - 3 Yr. Avg. 14.4%
Net Profit Margin 9.6%
Net Profit Margin - 3 Yr. Avg. 9.6%
Effective Tax Rate 34.9%
Eff/ Tax Rate - 3 Yr. Avg. 36.8%
Payout Ratio 21.4%

RJF stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RJF stock intrinsic value calculation we used $5520 million for the last fiscal year's total revenue generated by Raymond James Financial. The default revenue input number comes from 2016 income statement of Raymond James Financial. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our RJF stock valuation model: a) initial revenue growth rate of 17.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.8%, whose default value for RJF is calculated based on our internal credit rating of Raymond James Financial, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Raymond James Financial.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of RJF stock the variable cost ratio is equal to 85.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for RJF stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.9% for Raymond James Financial.

Corporate tax rate of 27% is the nominal tax rate for Raymond James Financial. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the RJF stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for RJF are equal to 3.8%.

Life of production assets of 7.9 years is the average useful life of capital assets used in Raymond James Financial operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for RJF is equal to -26.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4917 million for Raymond James Financial - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 143.981 million for Raymond James Financial is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Raymond James Financial at the current share price and the inputted number of shares is $10.5 billion.


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COMPANY NEWS

▶ Raymond James strikes $172M deal to buy Kansas City investment manager   [Apr-20-17 08:40AM  American City Business Journals]
▶ Why a major credit agency is keeping an eye on Raymond James   [Apr-18-17 02:05PM  American City Business Journals]
▶ Raymond James agrees to multimillion-dollar settlement in Vermont ski resort suits   [Apr-14-17 12:53PM  American City Business Journals]
▶ New Strong Buy Stocks for April 10th   [Apr-10-17 09:07AM  Zacks]
▶ 3 Tampa Bay companies among America's 'most valuable brands'   [08:00AM  American City Business Journals]
▶ New Strong Buy Stocks for March 29th   [Mar-29-17 10:31AM  Zacks]
▶ Who Will Win the March Madness of Trump Stocks?   [Mar-23-17 05:12PM  Zacks]
▶ Forbes: Eight of the worlds billionaires call Tampa Bay home   [Mar-20-17 02:15PM  at bizjournals.com]
▶ Not Big Enough: Three Stocks Will Be Booted From S&P 500   [Mar-13-17 11:37AM  at The Wall Street Journal]
▶ Raymond James moves into benchmark stock index   [08:05AM  at bizjournals.com]
▶ Raymond James rolls out new ads for March Madness, U.S. Open   [Mar-09-17 02:20PM  at bizjournals.com]
▶ UMs Florida stock index bests S&P 500   [Feb-24-17 08:00AM  at bizjournals.com]
▶ [$$] Raymond James to Begin Testing Robo Adviser in Third Quarter   [Jan-30-17 04:37PM  at The Wall Street Journal]
▶ What Raymond James sees ahead for IPOs   [Jan-27-17 08:00AM  at bizjournals.com]
▶ Raymond James Hits Record Profit   [Jan-26-17 09:45PM  at Barrons.com]
▶ [$$] Raymond James Profit Rises   [06:39PM  at The Wall Street Journal]
▶ [$$] Lovell Minnick Invests in Engage People   [Jan-17-17 12:51PM  at The Wall Street Journal]
▶ St. Petersburg bank raises $10 million   [Jan-12-17 02:20PM  at bizjournals.com]
▶ Meet the new chairman of Raymond James   [Dec-01-16 05:30PM  at bizjournals.com]
▶ Veteran on disability files claim against Raymond James   [Nov-29-16 09:38AM  PR Newswire]
Stock chart of RJF Financial statements of RJF
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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