Jefferies Financial Group Inc. (JEF – Free Report) is slated to report first-quarter fiscal 2025 (ended Feb. 28) results tomorrow, after market close. The company’s quarterly revenues and earnings are anticipated to have modestly improved on a year-over-year basis.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from solid improvement in the investment banking (IB) business and higher capital markets revenues. The performance of the reportable segments was also strong. However, an increase in non-interest expenses was an undermining factor.
Jefferies has an impressive earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and lagged once, with the average beat being 5.43%.
Jefferies Financial Group Inc. Price and EPS Surprise
Jefferies Financial Group Inc. price-eps-surprise | Jefferies Financial Group Inc. Quote
Before we take a look at what our quantitative model predicts, let us check the factors that are likely to have impacted Jefferies’ first-quarter performance.
Major Factors to Influence Jefferies’ Q1 Results
IB Income: Global mergers and acquisitions (M&As) reflected a slowdown in the first quarter of 2025 amid rising uncertainties due to tariff policies. Both deal value and volume were subdued, due to expectations of slowing U.S. economic growth, higher market volatility and delayed interest rate cuts. Also, potential retaliatory tariffs could lead to a trade war, dampening deal-making activities. Moreover, lingering geopolitical issues were a headwind.
Nonetheless, Jefferies’ position as one of the leading players in the space is likely to have supported advisory fees to some extent. The Zacks Consensus Estimate for advisory fees is pegged at $457.2 million, indicating a year-over-year increase of 35%.
The IPO market saw signs of cautious optimism, given market volatility, geopolitical challenges, stretched valuations and rising flotation costs. The equity market performance drove some decent activity in follow-up equity issuances. Further, bond issuance volume was decent on global rate cuts and attractive yields, but uncertainties continue to persist due to a tough macroeconomic environment. Hence, JEF’s underwriting fees are expected to have declined in the quarter.
The consensus estimate for debt underwriting fees is pegged at $159.1 million, indicating a 23.2% rise on a year-over-year basis. The Zacks Consensus Estimate for equity underwriting fees of $130 million indicates a decline of 37.9% from the prior-year quarter. The consensus estimate for total underwriting fees of $289.1 million implies a fall of 14.6% from the year-ago quarter.
Thus, growth in total IB income is likely to have been decent, driven by the modest rise in advisory fees partially offset by lower underwriting revenues. The Zacks Consensus Estimate for IB income of $779.5 million indicates a year-over-year rise of 5.4%.
Trading Income: The performance of Jefferies’ trading business is expected to have been decent in the to-be-reported quarter, supported by increased client activity and market volatility. Macroeconomic uncertainty, trade policies and Fed rate expectations, alongside geopolitical tensions, drove client activity. Further, volatility was high in equity markets and other asset classes, including commodities, bonds and foreign exchange. So, the company’s trading revenues are likely to have witnessed decent growth.
The Zacks Consensus Estimate for equity trading revenues is pegged at $420.6 million, indicating a rise of 17.1% from the prior-year quarter. The consensus estimate for fixed-income trading revenues of $373.4 million indicates year-over-year growth of 5.9%.
The Zacks Consensus Estimate for total capital markets income of $794 million implies a year-over-year increase of 11.6%.
Expenses: Cost reduction, which has long been the main strategy of Jefferies to remain profitable, is unlikely to have provided major support in the February-ended quarter. As the company has been investing in franchises and upgrading technology, overall costs are anticipated to have been elevated. Further, as JEF is expected to have recorded decent revenue growth, compensation related to it is also likely to have risen.
What the Zacks Model Unveils for JEF
Our quantitative model cannot conclusively predict an earnings beat for Jefferies this time around. This is because it does not have the right combination of the two key ingredients, a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Earnings ESP: Jefferies has an Earnings ESP of 0.00%.
Zacks Rank: The company currently carries a Zacks Rank of 3.
The Zacks Consensus Estimate for Jefferies’ earnings has been revised 9.3% downward over the past week to 88 cents per share. The estimate indicates a modest rise of 1.2% from the year-ago quarter’s number.
The consensus estimate for sales of $1.84 billion implies 6.1% growth on a year-over-year basis.
Jefferies’ Peers That Warrant a Look
Here are a few stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
JPMorgan (JPM – Free Report) is scheduled to release first-quarter 2025 earnings on April 11. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +1.24%.
JPM’s quarterly earnings estimates have moved roughly marginally upward over the past week.
Morgan Stanley (MS – Free Report) is slated to announce first-quarter 2025 results on April 11. The company currently carries a Zacks Rank of 3 and has an Earnings ESP of +1.20%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
MS’ earnings estimates for the to-be-reported quarter have moved 3.6% north over the past week.
Financial Market Newsflash
No financial news published today. Check back later.
