Critical Review: Raymond James (RJF) & Associated Capital Group (AC)

Raymond James (NYSE:RJF) and Associated Capital Group (NYSE:AC) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.

Volatility & Risk

Raymond James has a beta of 1.57, meaning that its share price is 57% more volatile than the S&P 500. Comparatively, Associated Capital Group has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500.

Insider and Institutional Ownership

72.7% of Raymond James shares are owned by institutional investors. Comparatively, 13.3% of Associated Capital Group shares are owned by institutional investors. 10.5% of Raymond James shares are owned by company insiders. Comparatively, 82.2% of Associated Capital Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Raymond James and Associated Capital Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Raymond James $7.48 billion 1.47 $856.69 million $6.47 11.83
Associated Capital Group $26.92 million 31.97 $8.83 million N/A N/A

Raymond James has higher revenue and earnings than Associated Capital Group.

Profitability

This table compares Raymond James and Associated Capital Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Raymond James 11.46% 15.72% 2.65%
Associated Capital Group -7.70% -0.22% -0.20%

Dividends

Raymond James pays an annual dividend of $1.36 per share and has a dividend yield of 1.8%. Associated Capital Group pays an annual dividend of $0.20 per share and has a dividend yield of 0.5%. Raymond James pays out 21.0% of its earnings in the form of a dividend. Raymond James has raised its dividend for 6 consecutive years and Associated Capital Group has raised its dividend for 2 consecutive years. Raymond James is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Raymond James and Associated Capital Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Raymond James 0 4 5 0 2.56
Associated Capital Group 0 1 1 0 2.50

Raymond James currently has a consensus price target of $95.43, indicating a potential upside of 24.68%. Associated Capital Group has a consensus price target of $40.00, indicating a potential upside of 5.04%. Given Raymond James’ stronger consensus rating and higher probable upside, analysts clearly believe Raymond James is more favorable than Associated Capital Group.

Summary

Raymond James beats Associated Capital Group on 12 of the 15 factors compared between the two stocks.

About Raymond James

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 provides corporate loans, SBL, tax-exempt loans, and residential loans. The Other segment engages in private equity activities, including various direct and third party private equity investments; and private equity funds. Raymond James Financial, Inc. was founded in 1962 and is based in St. Petersburg, Florida.

About Associated Capital Group

Associated Capital Group, Inc. provides investment advisory and asset management services in the United States. It offers alternative investment management, institutional research, and underwriting services. The company was founded in 2015 and is headquartered in Rye, New York.

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