LUKBRKAKMI23 is downgrading Egan Jones to NOT creditable due to there attack on the most financially sound and run company in the sector, and you can add Zerohedge too that downgrade toooo. IMO Egan and Zerohege are BS companies and why people are paying any attention to what they say is beyond me! I personally do not listen to any rating agency or anybody other than the great investors I admire. JEF is cheap if you buy @ today’s prices and hold for a few years you will be rewarded handsomely. JEF does not need to raise money for years they are well capitalized 2B+ and the MF Global collapse is bringing out all the loonies. They are in the same financial position as they were last crisis and they did not need a dime, if things get to that level again they can cut the dividend and hunker down for years without needing a dime from anyone. If it ever came to the point they needed money lets not forget LUK would be there for them and lets not forget who LUKs friend is you know the guy from Omaha. JEF is not MF Global or any other financial company they are in a different league! JEF is a conservatively run company who actually made there business much more complete and stronger during these last few years. Remember JEF is old school they are not like MF Global they shy away from risk. Looking @ valuation JEF has never been cheaper in its history; they are going to earn about 1.1-1.20 a share this year in a very tough environment. Using the low number 1.1 EPS for the year we get a P/E of 9. If there was NO market turmoil we are talking JEF earnings in the 1.6-2 range and most likely much higher. Using 1.60 we get a P/E of about 6. Now let’s not forget JEF has been growing 10-15% a year. Using the law of 72 with 10% growth we get a double in earnings in 7 years using the low numbers we get 2.2 and 2.40 which gives us a 4.5 P/E now using the normal environment #s we get 3.2-4 which gives us a P/E of 3 when using the lower part of the range. What if they get there market premium back and hit the high end 4 EPS in 7 years, lets forget about the 15% growth rate which would take less than 5 years? We get a P/E of 2.5 and a normal P/E for a company growing like JEF would be 15 or higher. So you see the upside and let’s not forget the dividend 3% which I might add they are still paying which I wish they would cut and put it towards buying back shares @ these levels. I would really love to increase that 20M buyback plan to 40M-60M. Let’s also not forget this is the same conservatively run company that did not need a dime back a few years ago because they were and still are in a much higher class than most financial companies. They are only going to get bigger and stronger as the market turmoil continues IMO, so buy some shares and go to a deserted island for a while if you can’t take the volatility and hopefully when you come back all this nonsense surrounding JEF will be gone!
Your math only works when times are good. This is all now a CONfidence game isn't it? Go talk to former clients and employees of Bear, Lehman, MF Global, etc. They might differ with your rosy outlook.
No need to talk to those employees unless they currently work at JEF. Current day it is a confidence valuation. That's what makes it a buy. Fear makes you money when a good company is irrationally feared for no logical reason.