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.

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.