A month has gone by since the last earnings report for Jefferies (JEF). Shares have added about 5.6% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Jefferies due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Jefferies Q2 Earnings Miss Estimates Despite Record IB Performance
Jefferies’ second-quarter fiscal 2026 (ended May 31) adjusted earnings per share from continuing operations of $1.03 missed the Zacks Consensus Estimate of $1.09. However, the bottom line increased significantly from the prior-year quarter.
Results were primarily aided by record IB advisory and underwriting net revenues, as well as record equities net revenues. However, a rise in expenses hurt the results to an extent.
Net earnings attributable to common shareholders (GAAP) increased significantly year over year from $88 million to $226.2 million.
Revenues Improve, Expenses Rise
Quarterly net revenues were $2.21 billion, up 35% from the prior-year quarter. The top line marginally missed the Zacks Consensus Estimate of $2.22 billion.
Total non-interest expenses were $1.89 billion, up 26.1% from the year-ago quarter. The rise was due to an increase in almost all cost components, except for depreciation and amortization costs, cost of sales, and other expenses.
As of May 31, 2026, book value per common share was $51.95, up from $49.96 as of May 31, 2025. Furthermore, adjusted tangible book value per fully diluted share increased from $32.84 to $34.55.
Quarterly Segment Performance
Investment Banking & Capital Markets: Total Net revenues were $2.01 billion, rising 36.4% from the prior-year quarter. Investment Banking net revenues were $1.21 billion, up 57.5% year over year, driven by higher advisory and equity underwriting revenues, while debt underwriting remained solid but declined year over year. Capital Markets net revenues were $799.3 million, up 13.5%, driven by increases in both Equities and Fixed Income net revenues.
Asset Management: Net revenues were $187.7 million, up 21.4% from the year-ago quarter. Asset management fees and revenues, as well as investment return, declined year over year, but other investments, inclusive of net interest, increased.
Balance Sheet Solid
As of May 31, 2026, total assets were $79.54 billion, up from $74.38 billion as of Feb. 28, 2026, while total shareholders’ equity was $10.57 billion, down modestly from $10.61 billion.
The leverage ratio was 7.5 compared with 6.5 in the prior-year quarter, and the tangible gross leverage ratio was 9.0 compared with 7.9.
Return on adjusted tangible shareholders’ equity was 12.8%, up from 5.5% in the prior-year quarter.
Share Repurchase Update
In the reported quarter, Jefferies repurchased 4 million common shares for $197 million, at an average price of $49.83 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -8.9% due to these changes.
VGM Scores
Currently, Jefferies has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Jefferies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
