Have Analysts Taken Jefferies Financial (JEF)'s Valuation Into Account?

Jefferies Financial may be undervalued with poor growth indicators, but the 4 analysts following the company give it an rating of hold. Their target prices range from $27.0 to $40.0 per share, for an average of $33.88. At today's price of $32.24, Jefferies Financial is trading -4.84% away from its average target price, suggesting there is an analyst consensus of some upside potential for the stock.

Jefferies Financial Group Inc. engages in the investment banking and capital markets, and asset management businesses in the Americas, Europe, the Middle East, and Asia. Based in New York, NY, the mid-cap Finance company has 5,401 full time employees. Jefferies Financial has provided a 3.7% dividend yield over the last 12 months.

Jefferies Financial has a trailing twelve month P/E ratio of 13.6, compared to an average of 14.34 for the Finance sector. Based on its EPS guidance of 3.87, the company has a forward P/E ratio of 8.3.

The average compound growth rate of the company's historical and projected earnings per share is 5.0%. On this basis, the company's PEG ratio is 2.78, which suggests that it is overpriced.

On the other hand, the market is potentially undervaluing Jefferies Financial in terms of its book value because its P/B ratio is 0.8. In comparison, the sector average P/B ratio is 1.57. The company's shares are currently -44.1% below their Graham number, indicating that its shares have a margin of safety.

Why would analysts be giving such an undervalued stock a bad rating? It's possible that analysts are looking beyond common valuation metrics and taking into account the company's potentially irresponsible use of debt to operate its business. Jefferies Financial's negative EPS growth rate of -6.0% is another drawback.

2019-11-30 2020-11-30 2021-11-30 2022-11-30
Revenue (MM) $3,893 $6,011 $8,185 $7,149
Revenue Growth n/a 54.4% 36.18% -12.66%
Operating Margins 7.1% 19.0% 28.7% 20.2%
Operating Margins Growth n/a 167.61% 51.05% -29.62%
Earnings Per Share $3.03 $2.65 $6.13 $2.37
EPS Growth n/a -12.54% 131.32% -61.34%
Diluted Shares (MM) 317 290 272 234
Free Cash Flow (MM) -$1,060 $1,899 $1,407 $1,581
FCF Growth n/a 279.14% -25.89% 12.3%
Capital Expenditures (MM) -$232 -$177 -$166 -$224
Net Debt / EBITDA 23.89 7.83 3.42 0.59
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