Grade: A — Strong Financial Health
Framework: Bank/wealth management-specific analysis + Schilit principles (traditional manufacturing checks partially N/A)
Data: SEC EDGAR 10-K (Filed 2025-11-25, FY ended September 30, 2025) + Yahoo Finance
Auditor: KPMG LLP — Unqualified opinion
One-line verdict: Raymond James is the cleanest wealth management franchise in this batch — zero red flags, zero watch items. Revenue grew 9.5% to $13.84B, net income grew 3.1% to $2.13B, CFFO/NI of 1.14x, and ROE of 17.7%. The company operates through Private Client Group, Capital Markets, Asset Management, and a Bank segment. Client assets of $1.57 trillion, AUM of $265.3B. Cash of $11.4B covers $4.2B debt by 2.7x. Goodwill and intangibles of $1.8B are only 15% of equity. Diluted EPS of $10.30 (GAAP) and $10.66 adjusted. Bank segment NIM improved slightly to 2.68%. The provision for credit losses in the Bank segment declined 18% to $37M — minimal credit risk.
| Metric | Result |
|---|---|
| Red Flags | **0** |
| Watch Items | **0** |
| Checks Completed | **12/18** (6 N/A) |
| Beneish M-Score | **N/A** (model does not apply to financial institutions) |
| F-Score (Fraud Probability) | **1.55** (0.57% probability — low) |
| Altman Z-Score | **N/A** (not applicable to financial services companies) |
| Auditor | KPMG LLP — Unqualified opinion |
| Fiscal Year | 2025 (ended September 30, 2025) |
| Report Date | 2026-04-05 |
A Diversified Wealth Management Platform
Per the 10-K, Raymond James operates through four segments: Private Client Group (PCG — financial advisors, ~$1.57 trillion in client assets), Capital Markets (investment banking, trading), Asset Management (AMS — $265.3B AUM including fee-based advisory), and Bank (Raymond James Bank — securities-based lending, commercial lending).
| Metric | FY2022 | FY2023 | FY2024 | FY2025 | Trend |
|---|---|---|---|---|---|
| Revenue | $10.85B | $11.47B | $12.64B | **$13.84B** | +9.5% |
| Net Income | $1.51B | $1.74B | $2.07B | **$2.13B** | +3.1% |
| Net Margin | 13.9% | 15.2% | 16.4% | **15.4%** | Stable |
| ROE | 16.0% | 17.0% | 17.7% | **17.1%** | Strong |
| CFFO | $0.07B | -$3.51B | $2.15B | **$2.43B** | +12.9% |
| FCF | -$0.02B | -$3.69B | $1.95B | **$2.25B** | +15.0% |
| Total Debt | $3.33B | $3.14B | $3.09B | **$4.22B** | +36.6% |
Revenue has grown every fiscal year. The CFFO volatility (negative $3.5B in FY2023) reflects changes in client cash balances and trading positions typical of a broker-dealer. CFFO normalized to $2.43B in FY2025 with CFFO/NI of 1.14x.
Per the filing, diluted EPS: $10.30 (GAAP), $10.66 (adjusted), up from $9.70 GAAP prior year. Compensation ratio of 64.3% (adjusted) vs 63.7% — reflecting the high-touch advisory model. Bank loan provision for credit losses declined 18% to $37M.
The 18-Point Screening
| # | Check | Result | Detail |
|---|---|---|---|
| A1 | DSO Change | PASS | DSO 74 days, -4 days improvement |
| A2 | AR vs Revenue Growth | PASS | AR +4.1% vs revenue +9.5% |
| A3 | Revenue vs CFFO | PASS | Revenue +9.5%, CFFO +12.9% |
| B1 | Inventory vs COGS | PASS | No inventory |
| B2 | CapEx vs Revenue | PASS | CapEx declining |
| B3 | SG&A Ratio | N/A | Financial services |
| B4 | Gross Margin | N/A | Financial services |
| C1 | CFFO vs Net Income | PASS | CFFO/NI = 1.14 |
| C2 | Free Cash Flow | PASS | FCF $2.25B |
| C3 | Accruals Ratio | PASS | -0.3% — clean |
| C4 | Cash vs Debt | PASS | Cash $11.4B covers $4.2B debt — 2.7x |
| D1 | Goodwill + Intangibles | PASS | $1.8B = 15% of equity |
| D2 | Leverage | N/A | Financial services |
| D3 | Soft Asset Growth | N/A | Financial services |
| D4 | Asset Impairment | N/A | No data |
| E1 | Serial Acquirer FCF | PASS | Positive |
| E2 | Goodwill Surge | PASS | -2% YoY |
| F1 | Beneish M-Score | N/A | Financial services |
Key Risks from the 10-K
1. Market-Driven Revenue
A significant portion of revenue comes from asset-based fees and transaction-based commissions. Per the filing, management fees in AMS are "generally calculated as a percentage of the value of our fee-billable financial assets under management." A sustained market decline would reduce AUM and associated fee income.
2. Advisor Retention and Competition
Per Item 1A, the PCG model depends on retaining financial advisors with portable client relationships. Competitor recruiting efforts and regulatory changes affecting advisor compensation could cause advisor departures.
3. Bank Segment Credit Risk
While the provision declined 18% to $37M, the Bank segment carries securities-based loans, commercial loans, and CRE exposure. Per the filing, NIM of 2.68% and provision trends should be monitored through the credit cycle.
4. Acquisition Integration
Goodwill of $1.8B reflects past acquisitions. Per the filing, acquisition-related expenses (retention compensation, intangible amortization) totaled $0.47 per diluted share. While declining, ongoing integration costs affect reported earnings.
Summary
Grade: A. Strong financial health. A high-quality wealth management franchise with clean earnings, low leverage, and consistent profitability.
Raymond James passes every applicable check. CFFO/NI of 1.14x, accruals of -0.3%, cash covering debt 2.7x, goodwill at only 15% of equity. Four consecutive years of revenue growth. ROE consistently above 16%. The Bank segment has minimal credit losses ($37M provision). The risks are market-driven (AUM sensitivity, advisor retention) rather than accounting quality concerns.
**Disclaimer**: This report is based on Raymond James Financial's fiscal year 2025 10-K filed with the SEC on November 25, 2025. This is NOT investment advice.
**About EarningsGrade**: We screen earnings reports for financial red flags using an 18-point forensic framework. Grade A means strong financial health with no significant concerns.