Raymond James Financial (NYSE: RJF) and Jefferies Group (NYSE:JEF) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, profitability, earnings, analyst recommendations and dividends.

Profitability

This table compares Raymond James Financial and Jefferies Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Raymond James Financial 9.75% 13.75% 2.25%
Jefferies Group N/A N/A N/A

Insider & Institutional Ownership

69.9% of Raymond James Financial shares are held by institutional investors. 11.2% of Raymond James Financial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and price targets for Raymond James Financial and Jefferies Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Raymond James Financial 1 1 4 0 2.50
Jefferies Group 0 0 0 0 N/A

Raymond James Financial presently has a consensus target price of $88.83, suggesting a potential downside of 0.78%.

Earnings and Valuation

This table compares Raymond James Financial and Jefferies Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Raymond James Financial $6.52 billion 1.98 $636.23 million $4.33 20.68
Jefferies Group N/A N/A N/A $1.09 N/A

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

Dividends

Raymond James Financial pays an annual dividend of $0.88 per share and has a dividend yield of 1.0%. Jefferies Group does not pay a dividend. Raymond James Financial pays out 20.3% of its earnings in the form of a dividend. Jefferies Group has increased its dividend for 4 consecutive years.

Summary

Raymond James Financial beats Jefferies Group on 9 of the 11 factors compared between the two stocks.

About Raymond James Financial

Raymond James Financial, Inc. (RJF) is a financial holding company. The Company’s subsidiaries include Raymond James & Associates, Inc. (RJ&A), Raymond James Financial Services, Inc. (RJFS), Raymond James Financial Services Advisors, Inc. (RJFSA), Raymond James Ltd. (RJ Ltd.), Eagle Asset Management, Inc. (Eagle), and Raymond James Bank, N.A. (RJ Bank). It operates through five segments: Private Client Group (PCG), Capital Markets, Asset Management, RJ Bank and the Other segment. The Private Client Group segment includes the retail branches of the Company’s broker-dealer subsidiaries located throughout the United States, Canada and the United Kingdom. The Capital Markets segment includes institutional sales and trading in the United States, Canada and Europe. The Asset Management segment includes the operations of Eagle, the Eagle Family of Funds and other fee-based asset management programs. RJ Bank segment provides corporate loan, securities based loans (SB) and residential loans.

About Jefferies Group

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.

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