Is Jefferies Financial a buy after topping earnings expectations by 51%?

on Oct 1, 2021
  • Jefferies shares on Friday edged higher 1.93% after posting solid FQ3 results.
  • The company announced its most recent quarterly results Thursday after markets closed, beating expectations.
  • JEF shares trade at an attractive forward P/E ratio of 11.4, paying dividends at a yield of 2.64%.

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On Friday, Jefferies Financial Group Inc. (NYSE:JEF) shares surged 1.93% after announcing its most recent quarterly results. The company reported its fiscal Q3 revenue and earnings Thursday after markets closed, beating analyst expectations.

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Jefferies’ fiscal Q3 GAAP earnings per share of $1.50 beat the consensus Street estimate of $0.99. On the other hand, revenue for the quarter grew by 19.8% Y/Y to $1.94 billion, outperforming the average analyst estimate of $1.74 billion.

Jefferies repurchased 1.5 million shares for a total of $52 million during the third quarter. It also approved an additional $52 million for the buyback program, pushing it back to a total of $250 million.

Jefferies looks like a buy

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From an investment perspective, Jefferies shares trade at a compelling forward P/E ratio of 11.4, making the stock attractive to value investors. Moreover, with analysts expecting its earnings per share to grow at an average annual rate of about 18% over the next five years, growth investors could also find the stock exciting.

In addition, Jefferies declared a dividend per share of $0.25, implying a yield of 2.64%. Therefore, considering its revamped share buyback program, the stock could also be appealing to dividend investors.

Source – TradingView

The rally seems poised to continue

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Technically, Jefferies shares appear to be trading within an ascending channel formation in the intraday chart. As a result, the stock has rallied closer to the overbought conditions of the 14-day RSI.

However, the stock still has room left to run before retesting the trendline resistance. Therefore, investors could target extended gains at about $41.09, or higher at $44.16. 

On the other hand, if Jefferies shares pull back after reaching overbought conditions, they could find support at $35.29, or lower at $31.96.

Time to buy Jefferies stock?

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In summary, although Jefferies shares are up 52% this year and more than 110% over the last 12 months, the stock still has room left to run, given Thursday’s FQ3 performance. 

Moreover, JEF shares still trade at an attractive forward P/E ratio of 11.4 and have exciting annual earnings growth prospects of 18% for the next five years. Therefore, it may not be too late to invest in the stock.

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