Jefferies (JEF) Dips Despite Q1 Earnings Beat, Revenue Growth

Jefferies Financial Group’s JEF first-quarter fiscal 2024 (ended Feb 29) adjusted earnings (excluding Weiss losses) of 87 cents per share surpassed the Zacks Consensus Estimate of 76 cents. In the prior-year quarter, the company recorded earnings of 54 cents.

Results were primarily aided by an improvement in net revenues. The performances of the reportable segments were also strong. However, higher expenses hurt the results to some extent. Also, in the reported quarter, the company recorded a pre-tax loss of $55 million associated with its investment in Weiss Multi-Strategy Advisers. Probably because of the negatives, shares of the company lost 1.4% in the after-market trading.

Net income attributable to common shareholders (GAAP basis) was $149.6 million, up 12% year over year.

Revenues Improve, Expenses Rise

Net revenues were $1.74 billion, up 35% year over year. The top line beat the Zacks Consensus Estimate of $1.49 billion.

Total non-interest expenses were $1.52 billion, up 35% from the prior-year quarter. The rise was due to an increase in all cost components.

Quarterly Segmental Performance

Investment Banking and Capital Markets: Net revenues were $1.45 billion, up 19% from the prior-year quarter. The rise was driven by solid performance across advisory, and equity and debt underwriting businesses, along with a robust performance in Equities, attributable to increased volumes and more favorable trading opportunities.

Asset Management: Net revenues were $273.4 million, up significantly from the year-ago quarter.

Share Repurchase Update

In the fiscal first quarter, Jefferies repurchased 1.1 million shares for $43 million.

Our View

A solid trading business, along with improvement in underwriting activities, is expected to support Jefferies’ financials. However, elevated expenses might hurt the bottom line to an extent in the near term.

Jefferies Financial Group Inc. Price, Consensus and EPS Surprise

 

Jefferies Financial Group Inc. Price, Consensus and EPS Surprise

Jefferies Financial Group Inc. price-consensus-eps-surprise-chart | Jefferies Financial Group Inc. Quote

Currently, Jefferies carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Expected Earnings Dates of Other Firms

JPMorgan JPM is scheduled to report first-quarter 2024 (ended Mar 31) results on Apr 12.

Over the past seven days, the Zacks Consensus Estimate for JPMorgan’s quarterly earnings has been unchanged at $4.21. This indicates 2.7% growth from the prior-year quarter.

Bank of America BAC is slated to announce first-quarter 2024 results on Apr 16.

Over the past seven days, the Zacks Consensus Estimate for Bank of America’s quarterly earnings has been unchanged at 77 cents, implying an 18.1% decline from the prior-year quarter reported number.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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