Will Jefferies (JEF) Gain on Rising Earnings Estimates?
Zacks Investment Research | Oct 07, 2021 12:20AM ET
Jefferies (NYSE:JEF) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this investment banking and capital markets company, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance , with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
Consensus earnings estimates for the next quarter and full year have moved considerably higher for Jefferies, as there has been strong agreement among the covering analysts in raising estimates.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
The earnings estimate of $1.10 per share for the current quarter represents a change of -0.9% from the number reported a year ago.
Over the last 30 days, one estimate has moved higher for Jefferies compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 61.76%.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $6.05 per share, representing a year-over-year change of +128.3%.
The revisions trend for the current year also appears quite promising for Jefferies, with one estimate moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 27.1%.
Favorable Zacks Rank
Thanks to promising estimate revisions, Jefferies currently carries a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Get The News You Want
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Bottom Line
Investors have been betting on Jefferies because of its solid estimate revisions, as evident from the stock's 5.8% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.
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