It’s earnings season again in the stock market, and investors are curiously waiting for companies to report. Three underrated companies that have already released their quarterly results are Raymond James Financial (NYSE:RJF), BlackRock (NYSE:BLK), and International Business Machines (NYSE:IBM). All three firms posted robust results.
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Market participants often consider a company’s earnings report as a critical component of stock price discovery. Evidence suggests companies that regularly beat earnings garner substantial stock price momentum. Moreover, a stock can shoot up after a solid quarter.
I’m bullish on Raymond James Financial, BlackRock, and International Business Machines after their latest earnings reports, as I think their current financial success is bound to sound operational prowess. Moreover, data from TipRanks corroborates my bullish fundamental overview. Let’s analyze.
Raymond James Financial (NYSE:RJF)
Raymond James Financial is an American diversified financial services company with a global footprint. Often overlooked by investors, Raymond James presents an excellent total-return opportunity for cyclical investors.
The company released its Q1-2023 earnings report last Wednesday, displaying an earnings-per-share beat of one cent ($2.29 EPS vs. $2.28 expected) while delivering revenue of $2.79 billion.
An enhanced overview of Raymond James’ quarterly earnings shows that it harnessed a 9.8% year-over-year increase in net new assets, taking its client group’s total assets up to $1.17 trillion. Furthermore, the company’s net loans surged by an astonishing 69% since December 2021, adding zest to the firm’s interest-bearing activities.
Raymond James could gather additional earnings momentum in 2023, with much potential stemming from its interest-bearing segment. Elevated interest rates and narrowing credit spreads provide an excellent opportunity for loan originators and debt investors to benefit.
Moreover, Raymond James’ valuation multiples can rise in the coming quarters, especially if a broad-based financial market recovery occurs, which would consequently provide investors with lucrative returns. Lastly, the stock’s dividend yield of 1.29% adds a layer to the asset’s total return potential.
Is RJF Stock a Buy, According to Analysts?
Turning to Wall Street, Raymond James earns a Hold consensus rating based on one Buy and five Holds assigned in the past three months. The average RJF stock price target of $125.40 suggests 11.2% upside potential.
BlackRock (NYSE:BLK)
BlackRock’s status as one of the world’s largest financial services companies means it lends constant exposure to financial market debate. The firm blitzed past its fourth-quarter estimates, revealing a quarterly earnings-per-share figure of $8.93 compared to estimates of $8.13 coupled with a revenue beat of $70 million.
Although BlackRock achieved softer results in 2022 than initially anticipated, its fourth-quarter numbers indicate that a pivot is en route. The asset management giant suffered from lower fees during last year’s abrupt bear market, resulting in compressed entry fees. However, the year-to-date financial market performance suggests a broad-based market recovery is highly probable, which could help BLK stock too.
Furthermore, BlackRock’s illiquid asset management activities remain “best-in-class,” as was displayed once more in its latest quarter, with the segment’s performance fees skyrocketing by 42% year-over-year. Illiquid activities are a critical component of BlackRock’s business model, which continues to add value throughout the economic cycle.
An appealing facet of BlacRock’s stock is its substantial profitability. The firm’s Q4 earnings per share of $8.93 were accompanied by a high operating income margin of 41.2%, presenting its shareholders with tangible value creation. Additionally, BlackRock stock’s dividend yield of 2.60% adds allure to its investment profile.
Is BLK Stock a Buy, According to Analysts?
Turning to Wall Street, BlackRock earns a Moderate Buy consensus rating based on eight Buys and three Holds assigned in the past three months. The average BLK stock price target of $782 suggests 3% upside potential.
International Business Machines (NYSE:IBM)
Although it just matched its earnings-per-share target ($3.60 EPS vs. $3.60 expected), IBM posted an impressive revenue beat of $320 million in its fourth quarter amid sustained software sales momentum.
After the earnings release, IBM’s CEO, Arvind Krishna, commented: “Our solid fourth-quarter performance capped a year in which we grew revenue above our mid-single digit model. Clients in all geographies increasingly embraced our hybrid cloud and AI solutions as technology remains a differentiating force in today’s business environment.”
Krishna’s comments align with IBM’s tangible results as the firm’s software and infrastructure segments grew 8% and 7%, respectively, year-over-year after adjusting for currency fluctuations.
The company is anticipated to deliver mild single-digit growth in 2023. In addition, IBM is also forecasted to provide $10.5 billion in consolidated free cash flow cash flows.
IBM’s total-return prospects are bright, with the stock’s price-to-earnings ratio at a mere 14.8x, equating to a 19.1% discount to its peers. On top of that, the stock’s dividend yield of ~4.9% is both lucrative and well-covered.
Is IBM Stock a Buy, According to Analysts?
Turning to Wall Street, IBM earns a Hold consensus rating based on three Buys, six Holds, and one Sell assigned in the past three months. The average IBM stock price target of $143.56 suggests 6.55% upside potential.
Concluding Thoughts
Raymond James, BlackRock, and IBM all delivered solid quarterly earnings results recently. Additionally, their fundamentals and cumulative return metrics are favorable, presenting lucrative investment opportunities.
