JEF
Jefferies Financial Group Inc.
$51.98
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 31.4% below fair value
You pay
$51.98
Bear
$53.02
Fair
$75.74
Bull
$98.46
Bear
$53.02
+2.0%
ROTCE 6.2% → 0.30x TBV
Fair
$75.74
+45.7%
ROTCE 8.3% → 0.50x TBV
Bull
$98.46
+89.4%
ROTCE 9.6% → 0.64x TBV
Key Value Driver
ROTCE (8.3%) vs. cost of equity (12.7%)
Implied Market Multiple
1.25x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $67.75 from 9 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $75.74 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Return on equity (8.3%) is below the minimum investors require (12.7%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $34.99 (55% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly