A Look At Jefferies Financial Group (JEF) Valuation As It Swaps Bitcoin Exposure For Gold Investments
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Bitcoin exit and renewed focus on gold
Jefferies Financial Group (JEF) has fully exited its 10% Bitcoin allocation in its pension portfolio, reallocating that exposure equally into physical gold bullion and gold mining stocks due to quantum computing security concerns.
See our latest analysis for Jefferies Financial Group.
Jefferies Financial Group shares trade at US$63.45, with a 90 day share price return of 17.41%, suggesting momentum has been building even as the year to date share price return is broadly flat. The 1 year total shareholder return of a 13.93% decline contrasts with the longer term 3 year and 5 year total shareholder returns of 81.84% and 207.09% respectively, against a backdrop of recent earnings, a fresh bond issuance and the decision to reweight pension assets away from Bitcoin toward gold, which may be reshaping how some investors think about its growth profile and risk mix.
If Jefferies shift in risk appetite has you thinking about where else capital is moving, it could be a good moment to broaden your search with fast growing stocks with high insider ownership.
With Jefferies shares up 17.41% over 90 days but still showing a 13.93% 1 year total return decline, is the recent strength an opportunity to consider a reset story, or is the market already reflecting expectations for future growth in the current price?
Price-to-Earnings of 20.6x: Is it justified?
At around US$63.45 per share, Jefferies is trading on a P/E of 20.6x. This sits below the US Capital Markets industry average but above the level indicated by our fair ratio work.
The P/E multiple captures how much investors are paying for each dollar of current earnings. This matters for an investment banking and capital markets firm where profitability can be cyclical and sensitive to deal volumes.
Jefferies appears to offer comparatively good value relative to both the broader US Capital Markets industry P/E of 25.8x and a peer group average of 22.4x. However, it appears more expensive when set against an estimated fair P/E of 18.2x that our fair ratio model indicates the market could eventually lean toward if sentiment or earnings expectations cool.
Explore the SWS fair ratio for Jefferies Financial Group
Result: Price-to-Earnings of 20.6x (ABOUT RIGHT)
However, this reset story could be knocked off course if capital markets activity slows sharply, or if earnings and Jefferies 20.6x P/E start to look stretched.
Find out about the key risks to this Jefferies Financial Group narrative.
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