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Jefferies (JEF)
NYSE:JEF

Jefferies (JEF) AI Stock Analysis

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JE

Jefferies

(NYSE:JEF)

Rating:59Neutral
Price Target:
Jefferies' stock score is primarily influenced by solid profitability and efficient cost management, as indicated by strong margins. However, the declining revenue growth and negative cash flow metrics pose significant risks. The technical analysis indicates bearish momentum, which could lead to further price declines. Valuation is reasonable, with a moderate P/E ratio and an attractive dividend yield. Overall, while profitability is strong, caution is advised due to financial risks and bearish technical indicators.
Positive Factors
Dividend
Dividend increased from 35c to 40c, interpreted as confidence in earnings growth over the next several years.
Investment Banking
There remains strong dialogue around potential investment banking transactions and our high-quality backlog continues to build.
Valuation
JEF trades at a lower price-to-earnings ratio compared to its investment banking peers, suggesting that its current valuation might be attractive.
Negative Factors
Earnings Performance
JEF reported EPS of 57c vs. consensus of 94c (-39%).
Market Conditions
The capital markets have become increasingly more challenging due to the uncertainties that have arisen around U.S. policy and geopolitical events.
Revenue
JEF missed revenues across the board, with significant declines in IB, Trading, and Asset Management compared to consensus.

Jefferies (JEF) vs. SPDR S&P 500 ETF (SPY)

Jefferies Business Overview & Revenue Model

Company DescriptionJefferies Financial Group Inc. (NYSE: JEF) is a diversified financial services company headquartered in New York City. It operates through two primary segments: Investment Banking and Capital Markets, and Merchant Banking. The firm provides a range of financial services including mergers and acquisitions advisory, underwriting, and trading of equities and fixed income products, as well as asset management services. Jefferies is known for its expertise in investment banking, particularly with middle-market companies, and has a robust presence in the global markets.
How the Company Makes MoneyJefferies primarily generates revenue through its investment banking and capital markets operations. In investment banking, it earns fees from advising clients on mergers and acquisitions, as well as from underwriting services for debt and equity offerings. The capital markets segment generates income from trading activities, including commissions and spreads on buying and selling securities in the equity and fixed income markets. Additionally, Jefferies' merchant banking activities involve investing in and managing a portfolio of companies and assets, which can provide returns through dividends, interest, and capital appreciation. Strategic partnerships and a diversified client base contribute significantly to Jefferies' earnings, allowing the company to leverage its market expertise and global reach.

Jefferies Financial Statement Overview

Summary
Jefferies demonstrates strong profitability and operational efficiency, as evidenced by high margins. However, challenges include declining revenue growth and negative cash flow metrics, signaling potential financial risks. The company's low reliance on debt is a positive aspect, but improving cash flow management will be crucial for sustaining long-term growth.
Income Statement
72
Positive
Jefferies shows a solid gross profit margin of 59.40% and a net profit margin of 6.87% for TTM, indicating strong operational efficiency and profitability. The EBIT margin of 35.07% and EBITDA margin of 45.06% further emphasize effective cost management. However, the revenue growth rate shows a decline of 2.03% from the previous year, which could be a concern for future growth prospects.
Balance Sheet
65
Positive
The debt-to-equity ratio stands at a low 0.11, reflecting limited financial leverage and reduced default risk. The return on equity (ROE) for TTM is 6.93%, showing moderate profitability relative to equity. The equity ratio is 14.53%, suggesting that Jefferies is not overly reliant on equity financing. However, the relatively low equity ratio may indicate some risk in financial stability.
Cash Flow
58
Neutral
Jefferies experienced a negative free cash flow in TTM, with a significant decline from the previous year. The operating cash flow to net income ratio is negative, indicating cash outflows exceeded income, which raises concerns about operational efficiency. On a positive note, the free cash flow to net income ratio is also negative, emphasizing the need for improved cash management.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
10.30B10.52B7.44B7.15B8.19B6.01B
Gross Profit
6.08B6.22B4.03B2.60B3.78B2.38B
EBIT
4.50B4.71B1.62B1.44B2.35B1.14B
EBITDA
4.65B4.68B3.21B1.63B2.51B2.17B
Net Income Common Stockholders
707.35M743.38M277.69M785.45M1.67B775.24M
Balance SheetCash, Cash Equivalents and Short-Term Investments
11.18B12.15B9.94B9.70B10.76B9.06B
Total Assets
70.22B64.36B57.91B51.06B60.40B53.12B
Total Debt
23.59B20.36B16.09B11.20B19.87B19.83B
Net Debt
12.41B8.21B7.57B1.50B9.11B10.77B
Total Liabilities
59.95B54.13B48.10B40.63B49.67B43.53B
Stockholders Equity
10.20B10.16B9.71B10.36B10.68B9.53B
Cash FlowFree Cash Flow
-1.78B-459.84M-1.93B1.58B1.41B1.90B
Operating Cash Flow
-1.57B-209.25M-1.93B1.80B1.57B2.08B
Investing Cash Flow
-1.64B210.31M-12.20M-60.54M-400.59M-186.19M
Financing Cash Flow
5.06B4.04B1.06B-2.84B994.29M-723.52M

Jefferies Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price49.76
Price Trends
50DMA
49.68
Positive
100DMA
59.57
Negative
200DMA
62.69
Negative
Market Momentum
MACD
0.25
Positive
RSI
50.13
Neutral
STOCH
19.92
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JEF, the sentiment is Neutral. The current price of 49.76 is below the 20-day moving average (MA) of 49.87, above the 50-day MA of 49.68, and below the 200-day MA of 62.69, indicating a neutral trend. The MACD of 0.25 indicates Positive momentum. The RSI at 50.13 is Neutral, neither overbought nor oversold. The STOCH value of 19.92 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JEF.

Jefferies Risk Analysis

Jefferies disclosed 27 risk factors in its most recent earnings report. Jefferies reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Jefferies Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
HLHLI
79
Outperform
$12.07B29.6919.93%1.32%24.88%39.55%
EVEVR
77
Outperform
$8.74B21.6529.73%1.42%26.88%68.65%
PJPJT
75
Outperform
$5.31B26.7496.33%0.68%16.04%60.32%
71
Outperform
$4.43B21.7917.59%1.02%12.29%99.57%
SFSF
69
Neutral
$9.82B18.2211.48%1.85%12.85%20.21%
64
Neutral
$12.67B9.747.58%17015.08%12.21%-6.96%
JEJEF
59
Neutral
$10.26B17.246.38%2.89%16.62%139.24%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
JEF
Jefferies
49.76
4.96
11.07%
EVR
Evercore Partners
234.48
35.15
17.63%
PIPR
Piper Sandler
256.36
49.46
23.91%
SF
Stifel Financial
95.61
16.65
21.09%
HLI
Houlihan Lokey
176.31
43.90
33.15%
PJT
PJT Partners
151.93
44.81
41.83%

Jefferies Corporate Events

DividendsBusiness Operations and StrategyFinancial Disclosures
Jefferies Reports Record Growth and Financial Health
Positive
Jan 8, 2025

Jefferies begins 2025 in its strongest position ever, driven by its talented team and unique culture, which has led to broad global growth and an enhanced market position. In 2024, the firm achieved $7 billion in net revenues and increased its quarterly dividend by 14.3%, reflecting significant progress in its M&A pipeline, IPO backlog, and trading volumes. The company has returned $6.4 billion to shareholders over seven years and had its credit ratings upgraded, indicating robust financial health and stakeholder alignment.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.