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Leucadia Remains Focused on Long-Term Growth Despite Risks
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On Sep 26, we issued an updated research report on diversified holding company, Leucadia National Corporation .
Leucadia's businesses have more or less stabilized after a torrid 2015 and are favorably positioned for the future. Companies like National Beef had a difficult period in the past years as the cattle industry went downhill, but the fundamentals seem to be improving. This is evident from the rise in profit margins of National Beef, as the demand for beef picked up while raw material prices declined. Solid traction is also envisioned within its Leucadia Asset Management platform.
In addition, Leucadia has diversified business operations that mitigate operating risks. The company’s businesses have separate revenue streams that move according to their own cycles. Consequently, the company remains relatively immune to the vagaries of a particular business at any given point of time. Ownership of a variety of strong cash-producing businesses helps Leucadia generate market-beating returns. The company also leverages the strength of Jefferies to find great investment banking opportunities to acquire more cash-cow businesses.
A pro-growth business environment with a lower corporate tax structure bode well for the economy and financial markets in general and for Jefferies. In addition, President Trump’s plan to spend $1 trillion in infrastructure projects over a period of 10 years and regulatory rollbacks for boosting the profitability of small and medium sized companies augur well for Leucadia. The company has outperformed the industry with an average year-to-date return of 6.1% as against a decline of 0.8% for the latter.
However, Leucadia has a significant exposure to the European market. In the present scenario, when the economy in the region is highly unpredictable particularly after the Brexit referendum, it becomes difficult for the company to increase revenues and reduce costs. Brexit could further result in higher tariff and non-tariff barriers to trade between the U.K. and the European Union, lowering the productivity of the company.
Moreover, Leucadia has to continually maintain and upgrade its computer systems and networks to prevent any intrusion and data theft of confidential and sensitive client information in Jefferies. At the same time, the company has to employ risk monitoring techniques such as scenario analysis and stress tests, exposure concentrations, counterparty exposure, leverage, cash capital, and performance analysis for Jefferies and Leucadia Asset Management. All these consume a significant amount of its resources and strain its profitability.
Nevertheless, we remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock. Better-ranked stocks in the industry include Hitachi, Ltd. (HTHIY - Free Report) and Bunzl plc (BZLFY - Free Report) , both sporting a Zacks Rank #1 (Strong Buy) and Barloworld Limited (BRRAY - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hitachi has a long-term earnings growth expectation of 13%. It surpassed estimates thrice in the trailing four quarters with an average positive earnings surprise of 108.1%.
Bunzl has a long-term earnings growth expectation of 3.2%.
Barloworld has a long-term earnings growth expectation of 17.3%.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
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Leucadia Remains Focused on Long-Term Growth Despite Risks
On Sep 26, we issued an updated research report on diversified holding company, Leucadia National Corporation .
Leucadia's businesses have more or less stabilized after a torrid 2015 and are favorably positioned for the future. Companies like National Beef had a difficult period in the past years as the cattle industry went downhill, but the fundamentals seem to be improving. This is evident from the rise in profit margins of National Beef, as the demand for beef picked up while raw material prices declined. Solid traction is also envisioned within its Leucadia Asset Management platform.
In addition, Leucadia has diversified business operations that mitigate operating risks. The company’s businesses have separate revenue streams that move according to their own cycles. Consequently, the company remains relatively immune to the vagaries of a particular business at any given point of time. Ownership of a variety of strong cash-producing businesses helps Leucadia generate market-beating returns. The company also leverages the strength of Jefferies to find great investment banking opportunities to acquire more cash-cow businesses.
A pro-growth business environment with a lower corporate tax structure bode well for the economy and financial markets in general and for Jefferies. In addition, President Trump’s plan to spend $1 trillion in infrastructure projects over a period of 10 years and regulatory rollbacks for boosting the profitability of small and medium sized companies augur well for Leucadia. The company has outperformed the industry with an average year-to-date return of 6.1% as against a decline of 0.8% for the latter.
However, Leucadia has a significant exposure to the European market. In the present scenario, when the economy in the region is highly unpredictable particularly after the Brexit referendum, it becomes difficult for the company to increase revenues and reduce costs. Brexit could further result in higher tariff and non-tariff barriers to trade between the U.K. and the European Union, lowering the productivity of the company.
Moreover, Leucadia has to continually maintain and upgrade its computer systems and networks to prevent any intrusion and data theft of confidential and sensitive client information in Jefferies. At the same time, the company has to employ risk monitoring techniques such as scenario analysis and stress tests, exposure concentrations, counterparty exposure, leverage, cash capital, and performance analysis for Jefferies and Leucadia Asset Management. All these consume a significant amount of its resources and strain its profitability.
Nevertheless, we remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock. Better-ranked stocks in the industry include Hitachi, Ltd. (HTHIY - Free Report) and Bunzl plc (BZLFY - Free Report) , both sporting a Zacks Rank #1 (Strong Buy) and Barloworld Limited (BRRAY - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hitachi has a long-term earnings growth expectation of 13%. It surpassed estimates thrice in the trailing four quarters with an average positive earnings surprise of 108.1%.
Bunzl has a long-term earnings growth expectation of 3.2%.
Barloworld has a long-term earnings growth expectation of 17.3%.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>