Why Is Jefferies (JEF) Down 4.5% Since Last Earnings Report?

Core Viewpoint - Jefferies has shown a significant rebound in its investment banking business and overall revenues, but rising expenses may pose challenges moving forward [2][3][5]. Financial Performance - Adjusted earnings from continuing operations for Q4 fiscal 2024 were $1.05 per share, exceeding the Zacks Consensus Estimate of 98 cents and up from 30 cents in the prior-year quarter [2][3]. - Net income attributable to common shareholders (GAAP basis) was $205.7 million, a substantial increase from $65.6 million in the prior-year quarter [3]. - For fiscal 2024, adjusted earnings from continuing operations were $3.39 per share, surpassing the consensus estimate of $3.20 and significantly up from $1.30 in fiscal 2023 [4]. - Net income attributable to common shareholders (GAAP basis) for fiscal 2024 was $669.3 million, rising from $260.9 million in the prior year [4]. Revenue and Expenses - Quarterly net revenues reached $1.96 billion, a 63.4% year-over-year increase, and exceeded the Zacks Consensus Estimate of $1.84 billion [5]. - For fiscal 2024, net revenues increased by 49.7% to $7.03 billion, also beating the consensus estimate of $6.93 billion [5]. - Total non-interest expenses were $1.65 billion, up 48.8% from the prior-year quarter, attributed to increases in nearly all cost components [5]. Segment Performance - Investment Banking and Capital Markets generated net revenues of $1.64 billion, a 54.9% increase from the prior-year quarter, driven by strong advisory and underwriting performance [7]. - Asset Management saw net revenues of $314.5 million, significantly up from $140.6 million in the year-ago quarter [7]. Valuation Metrics - As of November 30, 2024, book value per common share was $49.42, up from $46.10 a year earlier, while adjusted tangible book value per fully diluted share increased to $32.36 from $30.82 [6]. Market Sentiment - Recent estimates for Jefferies have trended downward, with a consensus estimate shift of -8.09% [8]. - The stock currently holds an average Growth Score of C, a Momentum Score of F, and a Value Score of C, resulting in an aggregate VGM Score of D [10]. - Jefferies has a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [11].