Analysts expect this investment banker to grow its earnings by 16.1%, annually, over the next five years. The shares have a current annual yield of 3.46%, paid quarterly.
Jefferies Financial Group Inc. (JEF)
From Internet Wealth Builder
Jefferies (formerly Leucadia) is the largest independent mid-market investment bank in the U.S., with major positions in equities, convertibles, and corporate debt. It also owns Berkadia, a commercial mortgage joint venture with Berkshire Hathaway. Other assets include wealth management businesses, real estate company HomeFed, foreign exchange dealer FXCM, and Linkem, an Italian wireless telephone business with over 500,000 customers.
Having reached a five-year high at $24 in January 2020, Jefferies share price halved in the March pullback. It has since recovered strongly, reaching an all-time high of $27 this month on the back of excellent results.
For the 2020 fourth quarter (to Nov. 30), Jefferies recorded record revenues of $1.6 billion. Operating income was a record $406 million, and net earnings of $307 million ($1.11 per share) also set a record.
For the full fiscal year, the company recorded records across the board. Revenues were $5.2 billion, operating income was $1.2 billion, and net income was $775 million ($2.65 per share). The results were driven by very strong underwriting and trading performance.
Jefferies raised its quarterly dividend by 33% to $0.20 per share. The company also repurchased 42.1 million shares for $813 million, equivalent to a price of $19.29 a share.
Jefferies is a Buy. The shares are selling at a 32% discount to its book value of $37.65 a share and a 7% discount to its tangible book value. With a one-third increase in its dividend and with its strong performance from its investment banking activities, the shares are good value.
Gavin Graham, Gordon Pape’s Internet Wealth Builder, buildingwealth.ca, 1-888-287-8229, January 25, 2021