JEF Q1 Earnings Lag Estimates on Weak IB & Capital Markets, Stock Down

Shares of Jefferies Financial Group’s (JEF Quick QuoteJEF – Free Report) fell 4.6% in after-market hours on lower-than-expected quarterly results. Its first-quarter fiscal 2025 (ended Feb. 28) adjusted earnings from continuing operations of 68 cents per share missed the Zacks Consensus Estimate of 88 cents. The bottom line also compared unfavorably with the prior-year quarter’s earnings of 78 cents per share.

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Results were adversely impacted by weak performance in the investment banking (IB) business and lower capital markets revenues. The performance of the reportable segments also declined. However, a reduction in non-interest expenses was a positive.

Net income attributable to common shareholders (GAAP basis) was $127.8 million, declining from $149.6 million in the prior-year quarter.

Jefferies’ Revenues Decline, Expenses Fall

Quarterly net revenues were $1.59 billion, down 8.4% year over year. The top line also lagged the Zacks Consensus Estimate of $1.84 billion.

Total non-interest expenses were $1.44 billion, declining 5% from the prior-year quarter. The fall was due to a decrease in almost all cost components except technology and communications costs, occupancy and equipment rental costs, business development costs, cost of sales, and other expenses.

As of Feb. 28, 2025, book value per common share was $49.48, up from $46.13 as of Feb. 29, 2024. Further, adjusted tangible book value per fully diluted share of $32.57 increased from $30.89.

JEF’s Quarterly Segment Performance

Investment Banking and Capital Markets: Net revenues were $1.40 billion, falling 3.6% from the prior-year quarter. The decline was due to lower equity underwriting and fixed-income performance in capital markets, partially offset by solid performance across advisory and debt underwriting businesses, along with a robust performance in Equities.

Asset Management: Net revenues were $191.7 million, down 29.9% from the year-ago quarter.

Jefferies’ Dividend Update

Concurrently, Jefferies announced a quarterly cash dividend of 40 cents per share. The dividend will be paid out on May 29, 2025, to shareholders as of May 19.

Our View on JEF

Elevated expenses driven by higher compensation, alongside exposure to geopolitical risk, given global presence, will likely hurt Jefferies’ financials in the near term. Yet, robust trading business and improving IB operations will offer support to some extent.

Currently, Jefferies has a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Dates of JEF’s Peers

JPMorgan (JPM Quick QuoteJPM – Free Report) is scheduled to report first-quarter 2025 results on April 11.

Over the past seven days, the Zacks Consensus Estimate for JPMorgan’s quarterly earnings has been revised marginally upward to $4.57. This indicates a 1.3% decline from the prior-year quarter.

Bank of America (BAC Quick QuoteBAC – Free Report) is slated to announce first-quarter 2025 results on April 15.

Over the past seven days, the Zacks Consensus Estimate for BAC’s quarterly earnings has been revised 1.2% lower to 80 cents, implying a 3.6% decline from the prior-year quarter.