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Jefferies (JEF) Q1 Earnings Beat Estimates on Lower Expenses

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Jefferies Financial Group Inc.’s (JEF - Free Report) first-quarter fiscal 2023 (ended Feb 28) adjusted earnings per share of 55 cents handily surpassed the Zacks Consensus Estimate of 48 cents. The bottom line, however, compared unfavorably with $1.24 earned in the prior-year quarter.

Results benefited from a decline in expenses and better-than-expected capital markets performance. However, lower revenues on dismal segment performance posed a headwind.

Results in the reported quarter excluded certain non-recurring items. After including those, net income attributable to shareholders was $133.6 million, down 59% year over year.

Revenues & Expenses Fall

Net revenues were $1.28 billion, down 24% year over year. However, the top line beat the Zacks Consensus Estimate of $1.13 billion.

Total non-interest expenses were $1.13 billion, down 13%. The fall was mainly due to lower compensation and benefits costs.

Segment Performance

Investment Banking and Capital Markets: Net revenues were $1.21 billion, down 17% from the prior-year quarter.

Asset Management: Net revenues were $78.3 million, which plunged 65% from the year-ago quarter.

Share Repurchase Update

During the fiscal first quarter, Jefferies repurchased 2.6 million shares for $98 million.

The company’s board of directors increased the share buyback authorization to a total of $250 million.

Our Take

Robust fixed income and equity trading business and lower expenses will support Jefferies’ financials. However, challenging market conditions for investment banking operations pose a concern.
 

Currently, Jefferies carries a Zacks Rank #4 (Sell).

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

Earnings Dates & Expectations of Other Banks

JPMorgan (JPM - Free Report) is slated to report first-quarter 2023 results on Apr 14.

Over the past 30 days, the Zacks Consensus Estimate for JPMorgan’s quarterly earnings has moved marginally lower to $3.43. This indicates 30.4% growth from the prior-year quarter.

Bank of America (BAC - Free Report) is scheduled to announce quarterly numbers on Apr 18.

Over the past 30 days, the Zacks Consensus Estimate for Bank of America’s quarterly earnings has moved 1.2% south to 81 cents, implying a 1.3% rise from the prior-year reported number.

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