Jefferies Beats Q1 Expectations; Shares Gain 3.7%

Jefferies Financial Group (NYSE: JEF) reported stronger-than-expected fiscal Q1 results, topping both earnings and revenue estimates.

Despite capital markets volatility and global instability, robust performance in the Investment Banking business, increased market share, and continued momentum in the Advisory business drove the beat.

Likewise, shares of the American financial services company gained 3.7% during the extended trading session on March 28.

Q1 Beat

Q1-adjusted earnings of $1.23 per share declined 42% year-over-year, but significantly beat analysts’ expectations of $0.97 per share. The company reported earnings of $2.13 per share for the prior-year period.

Revenues declined 30% year-over-year to $1.73 billion, but exceeded consensus estimates of $1.67 billion.

Segment-wise, Investment Banking and Capital Markets revenues declined 25% to $1.48 billion, while Merchant Banking revenues dipped 29% to $189 million. Asset Management net revenues saw the largest decline of 74% to $60 million.

Share Buybacks

The Board of Directors has authorized an additional share repurchase of up to $250 million.

During the first quarter, the company repurchased 10.038 million shares for $364.2 million at an average price of $36.28 per share. This includes 6.848 million shares bought back in the open market for $250.0 million under the current authorization, and 3.190 million shares for $114.2 million in connection with net-share settlements under the equity compensation plan.

Notably, Jefferies has repurchased 137.292 million shares in the last four years starting in January 2018, returning a whopping 43% of shareholders’ equity.

Analysts Recommendation

The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on one Buy and one Hold. The average Jefferies price target of $41 implies 28.29% upside potential to current levels.

Bloggers Weigh In

TipRanks data shows that financial blogger opinions are 100% Bullish on JEF stock, compared to a sector average of 71%.

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