Shares of Jefferies Financial Group Inc. JEF gained 1.4% in aftermarket trading in response to better-than-expected third-quarter fiscal 2021 (ended Aug 31) results. Earnings per share of $1.50 significantly outpaced the Zacks Consensus Estimate of $1.02. The bottom line compared favorably with $1.07 earned in the prior-year quarter.
Results were driven by a robust rise in revenues. Both the Investment Banking and Capital Markets, and Merchant Banking segments’ performance was impressive. However, higher expenses posed a headwind.
Net income attributable to shareholders was $407.5 million, up 34% year over year.
Revenues & Expenses Rise
Net revenues were $1.94 billion, up 20% year over year. Also, the top line beat the Zacks Consensus Estimate of $1.76 billion.
Total expenses were $1.36 billion, up 12%. The rise was mainly due to higher compensation and benefits costs.
Solid Segment Performance
Investment Banking and Capital Markets: Net revenues were $1.65 billion, up 30% from the prior-year quarter. Expenses totaled $1.06 billion, up 7%.
Asset Management: Net revenues were $12.6 million, down 89% from the year-ago quarter. Expenses totaled $31.2 million, up almost 1%.
Merchant Banking: Net revenues were $271.6 million, rising 23% from the prior-year quarter. Expenses were $241.1 million, up 55%.
Corporate: Net revenues were $1 million, up 62% from the prior year. Expenses were $11.4 million, down 30%.
Share Repurchase Update
During the fiscal third quarter, Jefferies repurchased 1.5 million shares for $52 million.
The company’s board of directors increased the share buyback authorization by $52 million to a total of $250 million.
Our View
Steady improvement in capital markets performance, solid capital position, and global footprints are expected to continue supporting Jefferies’ financials. However, a persistent rise in operating costs is a concern.
Jefferies Financial Group Inc. Price, Consensus and EPS Surprise
Jefferies Financial Group Inc. price-consensus-eps-surprise-chart | Jefferies Financial Group Inc. Quote
Currently, Jefferies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates of Other Banks
Among the other banks, JPMorgan JPM is slated to report third-quarter 2021 results on Oct 13. Both Citigroup C and Bank of America BAC are scheduled to announce quarterly numbers on Oct 14.
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