Is Jefferies Financial Group (JEF) Fairly Valued After Recent Modest Pullback?

Jefferies Financial Group (JEF) has been on the move lately, catching investor attention after a modest pullback over the past month. Although the catalyst is less headline-driven, its underlying performance prompts a closer look at what could come next.

See our latest analysis for Jefferies Financial Group.

Zooming out, Jefferies Financial Group’s share price is nearly unchanged so far this year, but the company’s longer-term track record tells a more rewarding story. Its total shareholder return over the past five years tops 280%, a solid testament to its compounding power and hints at why investors continue to watch for momentum shifts.

If you’re looking to spot more standout companies, now’s a smart time to broaden your search and check out fast growing stocks with high insider ownership

The big question is whether Jefferies is trading below its true value now and presenting a buying opportunity, or if recent gains mean the market has already priced in expectations for the group’s future growth.

Price-to-Earnings of 20.3x: Is it justified?

Jefferies Financial Group trades at a price-to-earnings ratio of 20.3x, which stands below the broader Capital Markets industry average of 26.3x. This signals the stock is valued more modestly than its main competitors.

The price-to-earnings (P/E) ratio tells investors how much they are paying per dollar of earnings. In this sector, the P/E is a vital benchmark given the importance of profitability and return expectations.

This lower multiple may indicate the market is not fully crediting Jefferies’ recent profit growth and earnings momentum, or it could reflect more cautious expectations for future expansion. Notably, compared to its peer average P/E of 23.1x, Jefferies still trades at a discount, suggesting a more attractive entry point for value-focused investors. However, when measured against the estimated fair price-to-earnings ratio of 18.1x, the stock is trading at a slight premium. This presents a possible ceiling for further multiple expansion if future earnings growth slows.

Explore the SWS fair ratio for Jefferies Financial Group

Result: Price-to-Earnings of 20.3x (ABOUT RIGHT)

However, slower revenue growth or failure to sustain recent profit gains could challenge the outlook for Jefferies and limit its valuation upside.

Find out about the key risks to this Jefferies Financial Group narrative.

Another View: What Does the DCF Say?

Taking a different approach, our DCF model suggests Jefferies is trading above its estimated fair value. While multiples indicate the stock looks reasonable relative to peers and the industry, the DCF result points to a potential downside if cash flow forecasts come up short. This may raise a concern for valuation risk.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Jefferies Financial Group for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Jefferies Financial Group Narrative

If you have a different take or want to dig into the numbers yourself, building your own story around the data is quick and straightforward. Do it your way

A great starting point for your Jefferies Financial Group research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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