Jefferies (JEF) shares soared 13% in the last trading session to close at $38.68. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 4.7% loss over the past four weeks.
Japan's Sumitomo Mitsui Financial Group Inc SMFG, which already has nearly 5% stake in Jefferies, intends to extent the partnership to Europe and Asia and is also considering raising its stake. This, thus, led to bullish investor sentiments, which drove JEF stock higher.
In an interview with Reuters, SMFG’s CEO Jun Ohta said, “There is no reason to limit our partnership to the United States.” Sumitomo Mitsui had acquired the stake in Jefferies in 2022 in a bid to strengthen its leveraged finance and cross-border M&A advisory operations in the United States.
Ohta, while reiterating SMFG's plan to increase its stake in Jefferies, noted that a deeper alliance would require a higher ownership ratio. He said, “I'm hoping to eventually increase our stake to make it our affiliated company.”
This investment banking and capital markets company is expected to post quarterly earnings of $0.56 per share in its upcoming report, which represents a year-over-year change of -58.8%. Revenues are expected to be $1.18 billion, down 34.6% from the year-ago quarter.
Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.
For Jefferies, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on JEF going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Jefferies belongs to the Zacks Financial - Miscellaneous Services industry. Another stock from the same industry, Rithm (RITM), closed the last trading session 1.9% higher at $8.44. Over the past month, RITM has returned -6.6%.
For Rithm , the consensus EPS estimate for the upcoming report has changed +1.1% over the past month to $0.29. This represents a change of -27.5% from what the company reported a year ago. Rithm currently has a Zacks Rank of #3 (Hold).
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