Raymond James Financial, Inc.RJFNYSE

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $369.85 per share(market-calibrated)

+140.5%

Upside to Fair Value

Current

$153.76

Pure Model

$376.75

Fair Value

$369.85

Bull Case

$429.83

Bear Case

$324.06

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

0.50%

Calibrated Growth

1.80%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $376.75.

What's Driving This Ratingfor RJF

✓

CapEx already efficient

CapEx at 0.92% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

✓

Premium margins already priced in

EBIT margin of 37.63% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects -2.01% revenue growth, fading to 2.50% by Year 10. Revenue reaches $22.6B (vs $15.9B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 200bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 76.23% indicates efficient cash generation. FCF reaches $6.7B by Year 10 (29.47% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.01

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.03%

Cost of Debt

Pre-tax Cost of Debt25.42%

Tax Rate21.33%

After-tax Cost of Debt20.00%

Equity Weight (E/V)87.23%

Debt Weight (D/V)12.77%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (87.23% × 9.03%) + (12.77% × 20.00%)

= 10.43%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$15.6B	$18.0B	$20.0B	$21.0B	$22.6B
EBIT	$5.9B	$6.8B	$7.5B	$7.9B	$8.5B
Tax	$1.3B	$1.4B	$1.6B	$1.7B	$1.8B
NOPAT	$4.6B	$5.3B	$5.9B	$6.2B	$6.7B
+ Depreciation	$160M	$186M	$205M	$216M	$232M
- Capex	$143M	$166M	$183M	$193M	$208M
- Δ NWC	-$32M	$124M	$49M	$51M	$55M
Free Cash Flow	$4.7B	$5.2B	$5.9B	$6.2B	$6.7B
Discount Factor	0.906	0.743	0.609	0.499	0.371
Present Value	$4.2B	$3.9B	$3.6B	$3.1B	$2.5B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$6.7B

Terminal Growth Rate2.50%

WACC10.43%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$86.0B

PV of Terminal Value$31.9B

Exit Multiple Method

Year 10 EBITDA$8.7B

Exit Multiple (EV/EBITDA)12.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$104.8B

PV of Terminal Value$38.8B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$33.9B

PV of Terminal Value$31.9B

Enterprise Value$65.8B

(-) Net Debt-$6.8B

Equity Value$72.6B

Shares Outstanding202M

Price per Share$359.52

Exit Multiple Method

PV of Projected FCFs$33.9B

PV of Terminal Value$38.8B

Enterprise Value$72.7B

(-) Net Debt-$6.8B

Equity Value$79.6B

Shares Outstanding202M

Price per Share$393.97

Pure Model Fair Value

$376.75

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
8.43%	$440.83	$449.75	$460.17	$472.51	$487.36
9.43%	$400.47	$406.68	$413.79	$422.00	$431.59
10.43%	$367.22	$371.70	$376.75	$382.47	$389.02
11.43%	$339.20	$342.52	$346.21	$350.34	$354.99
12.43%	$315.15	$317.67	$320.44	$323.50	$326.91

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$324.06

110.8% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.26

Base Case

$376.75

145.0% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 1.01

Bull Case

$429.83

179.5% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.86

Key Assumptions & Drivers• Financial Services Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-2.01%

Year 3 Revenue Growth7.37%

Year 5 Revenue Growth2.50%

Year 7 Revenue Growth2.50%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin37.63%

Tax Rate21.33%

Historical Capex / Rev0.92%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 12x EV/EBITDA (Financial Services sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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