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Jefferies' (JEF) Q4 Earnings Top Estimates on Revenue Growth

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Zacks Equity Research
·4 min read
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Jefferies Financial Group Inc.’s JEF earnings per share of $1.11 for the three-month period ended Nov 30, 2020 outpaced the Zacks Consensus Estimate of 14 cents. Further, the figure compares favorably with the earnings of 62 cents per share recorded in the three-month period ended Nov 30, 2019.

The company’s results were driven by a rise in revenues. Both the Investment Banking and Capital Markets segments, and Asset Management’s performance was relatively stronger in the reported quarter compared with the prior-year quarter. However, elevated expenses played spoilsport.

Net income attributable to shareholders for the three-month period ended Nov 30, 2020, was $307.3 million, up from the $195.5 million recorded in the three-month period ended Nov 30, 2019.

For the fiscal year ended Nov 30, 2020, net income attributable to shareholders was $769.6 million, down from the $959.6 million recorded in the prior year.

Revenues Improve, Expenses Rise

For the fiscal year ended Nov 30, 2020, net revenues was $6 billion, up from the prior year’s $3.9 billion.

Net revenues for the reported quarter came in at $1.86 billion, up from the $1.11 billion recorded in the three-month period ended Nov 30, 2019.

Total expenses were $1.43 billion, up from the $954.8 million reported in the fourth quarter of 2020. This increase can be attributed to the rise in almost all expense components.

Segmental Information

Investment Banking and Capital Markets: This segment reported net revenues of $1.54 billion in the three-month period ended Nov 30, 2020, significantly up from the $761.1 million recorded in the three-month period ended Nov 30, 2019. Expenses totaled $1.16 billion, up from the $698 million recorded in fourth-quarter fiscal 2019.

Asset Management: This segment reported net revenues of $89 million in the three-month period ended Nov 30, 2020, compared with negative revenues of $10.6 million recorded in the three-month period ended Nov 30, 2019. Expenses came in at $45.2 million, up from the $32.5 million reported in fourth-quarter fiscal 2019.

Merchant Banking: Net revenues were $231.9 million in the three-month period ended Nov 30, 2020, down from the $343.4 million seen in the three-month period ended Nov 30, 2019. Expenses were $192.9 million, up from the $183.7 million incurred in the three-month period ended Nov 30, 2019.

Corporate: This segment reported net revenues of $1.4 million, down from the $10.7 million recorded in the three-month period ended Nov 30, 2020. Expenses were $32.2 million, down from the $68.9 million witnessed in fourth-quarter fiscal 2019.

Capital Deployment

Concurrent with the earnings release, Jefferies Financial announced a quarterly dividend of 20 cents per share, up 33%. The dividend will be paid out on Feb 26 to shareholders of record as of Feb 12, 2021.

Also, the company has increased the share-repurchase authorization by $193 million to $250 million.

Our Viewpoint

Jefferies is a geographically-diversified company, with presence in almost all major global markets. Consequently, risks stemming from geographical diversification might dampen its financials. Moreover, elevated costs are likely to hurt profits. Nevertheless, supported by a solid capital position, Jefferies is expected to continue enhancing shareholder value through efficient capital-deployment activities.
 

Jefferies Financial Group Inc. Price, Consensus and EPS Surprise

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

 

Performance of Other Investment Brokers

Among the other finance companies, JPMorgan Chase JPM and Citigroup C are slated to report quarterly results on Jan 15. The Bank of New York Mellon Corp. BK is expected to report numbers around Jan 20.

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