Goldman Sachs Group (GS) & Jefferies Group (JEF) Critical Review

Jefferies Group (NYSE: JEF) and Goldman Sachs Group (NYSE:GS) are both financials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, dividends, institutional ownership, analyst recommendations, profitability and earnings.

Institutional & Insider Ownership

73.4% of Goldman Sachs Group shares are owned by institutional investors. 2.6% of Goldman Sachs Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Jefferies Group and Goldman Sachs Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Jefferies Group N/A N/A N/A $1.09 N/A
Goldman Sachs Group $30.61 billion 2.95 $7.40 billion $19.25 12.44

Goldman Sachs Group has higher revenue and earnings than Jefferies Group. Jefferies Group is trading at a lower price-to-earnings ratio than Goldman Sachs Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Jefferies Group and Goldman Sachs Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Jefferies Group N/A N/A N/A
Goldman Sachs Group 26.42% 11.34% 0.95%

Dividends

Goldman Sachs Group pays an annual dividend of $3.00 per share and has a dividend yield of 1.3%. Jefferies Group does not pay a dividend. Goldman Sachs Group pays out 15.6% of its earnings in the form of a dividend. Goldman Sachs Group has increased its dividend for 5 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Jefferies Group and Goldman Sachs Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Jefferies Group 0 0 0 0 N/A
Goldman Sachs Group 3 13 11 0 2.30

Goldman Sachs Group has a consensus price target of $244.76, suggesting a potential upside of 2.24%.

Summary

Goldman Sachs Group beats Jefferies Group on 10 of the 11 factors compared between the two stocks.

Jefferies Group Company Profile

Jefferies Group LLC and its subsidiaries operate as a securities and investment banking firm. The Company operates in two business segments: Capital Markets segment consists of the Company’s securities and commodities trading activities and its investment banking activities, and Asset Management segment includes asset management activities and related services. On July 1, 2011, the Company acquired the Bache Global Commodities Group from Prudential Financial, Inc., and as of November 30, 2011, the Company operated a futures commission merchant through Jefferies Bache, LLC in the United States and a global commodities and financial derivatives broker through Jefferies Bache Limited in the United Kingdom. Effective March 1, 2013, Leucadia National Corp (Leucadia) acquired the remaining 71.4% interest in Jefferies Group Inc . Effective March 1, 2013, Leucadia National Corp (Leucadia) acquired the remaining 71.4% interest in Jefferies Group Inc.

Goldman Sachs Group Company Profile

The Goldman Sachs Group, Inc. is an investment banking, securities and investment management company that provides a range of financial services to corporations, financial institutions, governments and individuals. The Company operates in four business segments: Investment Banking, Institutional Client Services, Investing & Lending, and Investment Management. The Investment Banking segment consists of financial advisory and underwriting. The Institutional Client Services segment makes markets and facilitates client transactions in fixed income, equity, currency and commodity products. The investing and lending activities, which are typically longer-term, include its investing and relationship lending activities across various asset classes, primarily debt securities and loans, public and private equity securities, infrastructure and real estate. The Investment Management segment provides investment and wealth advisory services. As of December 2016, it had offices in over 30 countries.

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