Jefferies (JEF)

Investment banking firm Jefferies Financial Group (NYSE:JEF) reported Q4 CY2025 results topping the market’s revenue expectations, with sales up 5.7% year on year to $2.07 billion. Its GAAP profit of $0.85 per share was 10% below analysts’ consensus estimates.

Company Overview

Tracing its roots back to 1962 and rebranded from Leucadia National Corporation in 2018, Jefferies Financial Group (NYSE:JEF) is a global investment banking and capital markets firm that provides advisory services, securities trading, and asset management to corporations, institutions, and wealthy individuals.

Investment banks and brokerages facilitate capital raises, mergers and acquisitions, and securities trading. The sector benefits from corporate activity during economic expansion, increased retail trading participation, and advisory opportunities in emerging sectors. Headwinds include economic cycle vulnerability affecting deal flow, compressed trading commissions due to electronic platforms, and regulatory capital requirements constraining certain higher-risk activities.

Jefferies Financial Group competes with major global investment banks including Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), JPMorgan Chase (NYSE:JPM), and Bank of America's Merrill Lynch (NYSE:BAC), as well as boutique investment banks like Evercore (NYSE:EVR) and Lazard (NYSE:LAZ).

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Jefferies’s 4.1% annualized revenue growth over the last five years was sluggish. This fell short of our benchmark for the financials sector and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Jefferies’s annualized revenue growth of 25% over the last two years is above its five-year trend, suggesting its demand recently accelerated. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Jefferies reported year-on-year revenue growth of 5.7%, and its $2.07 billion of revenue exceeded Wall Street’s estimates by 3%.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Investment Banking & Brokerage companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

Financials companies manage interest-bearing assets and liabilities, making the interest income and expenses included in pre-tax profit essential to their profit calculation. Taxes, being external factors beyond management control, are appropriately excluded from this alternative margin measure.

Over the last five years, Jefferies’s pre-tax profit margin has risen by 5.9 percentage points, going from 27.7% to 11.9%. Luckily, it seems the company has recently taken steps to address its expense base as its pre-tax profit margin expanded by 4.3 percentage points on a two-year basis.

In Q4, Jefferies’s pre-tax profit margin was 12.2%. This result was 3.3 percentage points worse than the same quarter last year.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Jefferies’s flat EPS over the last five years was below its 4.1% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded due to factors such as interest expenses and taxes.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Jefferies, its two-year annual EPS growth of 60.4% was higher than its five-year trend. This acceleration made it one of the faster-growing financials companies in recent history.

In Q4, Jefferies reported EPS of $0.85, down from $0.93 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Jefferies’s full-year EPS of $2.83 to grow 58.2%.

Financial firms profit by providing a wide range of services, making them fundamentally balance sheet-driven enterprises with multiple intermediation roles. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these multifaceted institutions.

This is why we consider tangible book value per share (TBVPS) an important metric for the sector. TBVPS represents the real net worth per share across all business segments, providing a clear measure of shareholder equity regardless of the complexity of operations. EPS can become murky due to the complexity of multiple revenue streams, acquisition impacts, or accounting flexibility across different financial services, and book value resists financial engineering manipulation.

Jefferies’s TBVPS grew at a sluggish 2.4% annual clip over the last five years. On a two-year basis, however, dynamics have changed as TBVPS dropped by 3.8% annually ($36.39 to $33.69 per share).

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, Jefferies has averaged an ROE of 8.2%, uninspiring for a company operating in a sector where the average shakes out around 10%.

It was encouraging to see Jefferies beat analysts’ revenue expectations this quarter. On the other hand, its EPS missed. Overall, this quarter could have been better. The stock traded down 3.3% to $62.55 immediately after reporting.

Updated: January 7, 2026 at 4:30 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Jefferies, you should also grasp the company’s longer-term business quality and valuation.

Jefferies isn’t a terrible business, but it isn’t one of our picks. To kick things off, its revenue growth was uninspiring over the last five years. On top of that, Jefferies’s declining pre-tax profit margin shows the business has become less efficient, and its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders.

Jefferies’s P/E ratio based on the next 12 months is 13.9x. Beauty is in the eye of the beholder, but our analysis shows the upside isn’t great compared to the potential downside. We're pretty confident there are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $73.67 on the company (compared to the current share price of $62.55).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.