Jefferies Financial Group Inc. (NASDAQ: JEF) has confirmed the earnings release date for its fiscal Q4 2021, which is today before the market open.
What to look for
Despite the current uncertainty resulting from the pandemic, the global economy is recovering and showing an uptrend which is good news for the company. In addition, when the company reports its Q4 earnings, it is expected to reflect robust activity in acquisitions and mergers and capital markets that give prospects for Jefferies to show the durability of its results and enhanced market share.
Earnings: Stockearning’s estimated EPS for the current quarter under review is around $1.4. In the fourth quarter of 2021, the company had an EPS of $1.11. Historical EPS Performance for the past 12 quarters shows that the company has beat estimates nine times (75%) and missed thrice (25%). In the last quarter, the company had a net income attributable to shareholders of $407 million or EPS of $.151, producing an earnings surprise of 48.04%.
Revenue: For the third quarter, the company had net revenues of $1.65 billion, representing a 19% YoY increase. Jefferies Group LLC had record net revenues of $5.4 billion for the nine months ending august 2021, representing annualized growth of 50%.
Stock movement: JEF shares have been UP 9 times out of the past 15 quarters. So, the historical price reaction indicates a 60% probability of the share price going UP once Jefferies reports its fiscal Q4 2021 earnings. According to the Stockearning algorithm, the predicted first-day move is 3%, while the predicted move on the seventh day is 5%.
What analysts are saying
Morgan Stanley analyst Manan Gosalia commenced coverage of Jefferies Financial Group with a Hold rating and a price target of $40. Gosalia views Jefferies Financial Group as better positioned for the medium but expects 2022 to be a transition year for the company's trading and investment banking revenue expected to drop 20% this year as the Fed taper, market volatility, and increasing interest rates are expected to bring a more difficult year.
Keefe Bruyette analyst Michael Brown downgraded the company from Buy to Hold but maintained his price target of $46 on the stock. Brown cited valuation as the reason for the downgrade. In a research note, the analyst told investors that the company is in a better position to leverage opportunities in trading and banking and that the monetization bull case from the trading bank and buyback is intact. So far, the shares are up 74.4% year to date, stated the analyst. However, Brown added that with SMFC's stake close to its target of 4.9%, thus losing that technical support, the shares will have a challenging time outperforming peers in the near term.
Goldman Sachs analyst James Yaro commenced coverage of the stock with a price target of $45 and a buy rating. Yaro initiated coverage on independent investment banks stating that consensus is "overly pessimistic" on Jefferies' sales trajectory. In a research note, the analyst told investors that the market is yet to discount that the company has finalized much of its transition from being a merchant bank. He added that the company is a pure-play, full-service investment firm with low revenue volatility and high returns.
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