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Jefferies (JEF) to Optimize Operations With 4-Year AWS Deal

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Jefferies Financial Group Inc. JEF recently announced that it has agreed to flit its information-technology services to the cloud using Amazon Web Services (AWS) of Amazon.com, Inc. AMZN. JEF inked the four-year deal with AWS to modernize its technology infrastructure.

This move marks the latest in the spate of financial firms migrating to cloud-based software and data analytics. The adoption of cloud computing to improve workflow is a common theme throughout the market at the moment. Amazon.com’s AWS is expected to serve as the primary cloud infrastructure provider for JEF, which will move the latter’s companywide data to the cloud. The deal is likely to boost speed, efficiency, security and quality of JEF’s services.

Further, with the help of AWS’ cloud expertise, Jefferies can develop new products for its clients, optimize its data capabilities and reach more markets. Thanks to this new agreement, JEF expects the cloud-native platforms to serve as the base for its above 90% workload.

Jefferies intends to train more than 1,500 technologists on the AWS program to boost cloud-adoption over the next couple of years. This is expected to bring down JEF’s operating costs and improve its profitability.

Jefferies’ drive to minimize costs is significant in its latest earnings reports. In the last reported quarter, total expenses were down 21.8% year over year to $1.3 billion. Lowering expenses will keep supporting JEF’s bottom line, which is expected to suffer the challenging market conditions for fixed income trading operations.

The Zacks Consensus Estimate for Jefferies’ current-year earnings has improved 6.4% in the past 60 days. The stock has witnessed two upward estimate revisions during this time against none in the opposite direction.

Jefferies’ earnings beat estimates thrice in the last four quarters and missed the mark once, the average surprise being 33.1%. This is depicted in the graph below.

Jefferies Financial Group Inc. Price and EPS Surprise

Jefferies Financial Group Inc. Price and EPS Surprise
Jefferies Financial Group Inc. Price and EPS Surprise

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

Zacks Rank & Other Key Picks

Jefferies currently has a Zacks Rank #2 (Buy). Some other top-ranked stocks from the finance space are Cincinnati Financial Corporation CINF and Assurant, Inc. AIZ, each currently carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Based in Fairfield, OH, Cincinnati Financial’s consistent cash flow and sufficient cash balance continue to boost liquidity. The Zacks Consensus Estimate for CINF’s 2022 bottom line has witnessed one upward revision with no downward movement in the past 30 days. CINF’s earnings beat estimates in each of the last four quarters, the average being 32.6%.

Assurant’s Global Lifestyle segment has been putting up an impressive performance for a while, backed by its higher net premium, and fee and other income, which saw a CAGR of 13.1% from 2016 to 2021. The Zacks Consensus Estimate for AIZ’s 2022 bottom line has improved 8.1% in the past 60 days. AIZ’s earnings beat estimates in each of the last four quarters, the average being 18.3%.


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