Can JEF sustain its EPS growth trend into 2025?

Jefferies Financial Group (NYSE: JEF) faces challenges in sustaining its EPS growth trend into 2025, based on the following points: 1. **Recent Performance**: The most recent quarter's EPS of $0.60 missed analysts' consensus estimates by $0.28, indicating a significant shortfall. This performance is a departure from the previous quarter's EPS of $0.91, which also missed estimates but by a smaller margin. |code|Ticker|Name|Date|Diluted EPS YoY|Diluted EPS|market_code| |---|---|---|---|---|---|---| |JEF|JEF.N|Jefferies Financial|2024 Q2|1180|0.64|169| |JEF|JEF.N|Jefferies Financial|2024 Q3|240.9090909090909|0.75|169| |JEF|JEF.N|Jefferies Financial|2025 Q1|-13.636363636363647|0.57|169| 2. **Revenue Decline**: The company's revenue fell by 8.4% year-over-year, with total revenue coming in at $1.59 billion, below the expected $1.93 billion. This decline in revenue, coupled with missing EPS targets, points to operational challenges. 3. **Market Conditions**: Jefferies Financial Group attributes its poor results to a decline in investment banking activity, which is sensitive to market conditions and investor sentiment. The uncertainties around U.S. trade policies and geopolitical events have created a more challenging capital markets environment, impacting deal activity such as M&A and IPOs. 4. **Dividend Sustainability**: While Jefferies Financial Group has declared a quarterly dividend of $0.40 per share, with an annualized yield of 2.65%, the company's dividend payout ratio is high at 53.69%. This suggests that a significant portion of earnings is being returned to shareholders through dividends, which could limit the company's ability to reinvest in growth and sustain EPS growth. 5. **Analyst Ratings and Price Targets**: Despite the challenges, Jefferies Financial Group has received mixed analyst ratings, with some maintaining an "overweight" rating and setting a price target of $75.00. However, the stock has already declined 23% in 2025 and faced further pressure after the latest results, making it uncertain how much upside potential remains for EPS growth to be sustained. In conclusion, while Jefferies Financial Group has a history of dividend payments and a strong buy rating from analysts, the current quarter's significant EPS shortfall, revenue decline, and challenging market conditions suggest that sustaining EPS growth into 2025 will be difficult unless there is a rebound in investment banking activity and a shift in market conditions.