Home Stock Is Jefferies Financial a buy after topping earnings expectations by 51%?

Is Jefferies Financial a buy after topping earnings expectations by 51%?


On Friday, Jefferies Financial Group Inc. (NYSE:JEF) shares surged 1.93% after announcing its most recent quarterly results. The company reported its fiscal Q3 revenue and earnings Thursday after markets closed, beating analyst expectations.

Jefferies’ fiscal Q3 GAAP earnings per share of $1.50 beat the consensus Street estimate of $0.99. On the other hand, revenue for the quarter grew by 19.8% Y/Y to $1.94 billion, outperforming the average analyst estimate of $1.74 billion.

Jefferies repurchased 1.5 million shares for a total of $52 million during the third quarter. It also approved an additional $52 million for the buyback program, pushing it back to a total of $250 million.

Jefferies looks like a buy

From an investment perspective, Jefferies shares trade at a compelling forward P/E ratio of 11.4, making the stock attractive to value investors. Moreover, with analysts expecting its earnings per share to grow at an average annual rate of about 18% over the next five years, growth investors could also find the stock exciting.

In addition, Jefferies declared a dividend per share of $0.25, implying a yield of 2.64%. Therefore, considering its revamped share buyback program, the stock could also be appealing to dividend investors.

Source – TradingView

The rally seems poised to continue

Technically, Jefferies shares appear to be trading within an ascending channel formation in the intraday chart. As a result, the stock has rallied closer to the overbought conditions of the 14-day RSI.

However, the stock still has room left to run before retesting the trendline resistance. Therefore, investors could target extended gains at about $41.09, or higher at $44.16. 

On the other hand, if Jefferies shares pull back after reaching overbought conditions, they could find support at $35.29, or lower at $31.96.

Time to buy Jefferies stock?

In summary, although Jefferies shares are up 52% this year and more than 110% over the last 12 months, the stock still has room left to run, given Thursday’s FQ3 performance. 

Moreover, JEF shares still trade at an attractive forward P/E ratio of 11.4 and have exciting annual earnings growth prospects of 18% for the next five years. Therefore, it may not be too late to invest in the stock.

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