Assessing Jefferies Financial Group (JEF) Valuation After Recent Weak Short Term Share Price Performance

Jefferies Financial Group stock: recent performance snapshot

Jefferies Financial Group (JEF) has been on investors’ radar after a stretch of mixed returns, with the share price down over the past month and year, but higher across the past 3 years and 5 years.

See our latest analysis for Jefferies Financial Group.

With the latest share price at $53.72, Jefferies’ recent 7 day share price return of an 8.86% decline and 30 day share price return of a 15.33% decline contrast with its 3 year total shareholder return of 49.01%. This suggests that short term momentum is fading compared with a stronger multi year record.

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So with Jefferies trading at $53.72, sitting at a discount to the average analyst price target of $73.67 but also showing a small intrinsic premium, is there a genuine opening here or is the market already pricing in future growth?

Price-to-Earnings of 17.5x: Is it justified?

On a P/E of 17.5x at a share price of $53.72, Jefferies Financial Group screens as cheaper than both the wider US market and its Capital Markets peers, while still sitting slightly above the SWS DCF estimate of $50.86.

The P/E ratio compares the company’s share price with its earnings per share. For Jefferies and other capital markets firms it is a quick way for investors to gauge how much they are paying for each dollar of current earnings.

Jefferies is described as trading at good value compared to peers and the US Capital Markets industry, with its 17.5x P/E below the peer average of 19x and well below the sector average of 23.1x. It is also close to the estimated fair P/E of 18.5x, which is a level the market could move toward if sentiment or earnings expectations shift.

Explore the SWS fair ratio for Jefferies Financial Group

Result: Price-to-Earnings of 17.5x (UNDERVALUED)

However, recent one-year share price declines and the small intrinsic premium to the SWS DCF estimate could challenge the case that Jefferies is clearly undervalued.

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

Another view using the SWS DCF model

The SWS DCF model paints a cooler picture, with an estimated fair value of $50.86 versus the current $53.72 share price. This implies a small intrinsic premium rather than a discount. If earnings and cash flows do not meet expectations, could that gap become more important for you than the P/E story?

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 53 high quality undervalued stocks. 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 look at these numbers and reach a different conclusion, or simply want to stress test the assumptions yourself, you can build a tailored view in just a few minutes by starting with 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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