XP (NASDAQ:XP) vs. Jefferies Financial Group (NYSE:JEF) Financial Review

Jefferies Financial Group (NYSE:JEF) and XP (NASDAQ:XP) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, risk, earnings, profitability and institutional ownership.

Risk & Volatility

Jefferies Financial Group has a beta of 1.54, indicating that its share price is 54% more volatile than the S&P 500. Comparatively, XP has a beta of 1.11, indicating that its share price is 11% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for Jefferies Financial Group and XP, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Jefferies Financial Group	1	4	2	0	2.14
XP	0	2	3	0	2.60

Jefferies Financial Group currently has a consensus price target of $62.62, suggesting a potential upside of 22.12%. XP has a consensus price target of $23.33, suggesting a potential upside of 44.26%. Given XP’s stronger consensus rating and higher possible upside, analysts plainly believe XP is more favorable than Jefferies Financial Group.

Dividends

Jefferies Financial Group pays an annual dividend of $1.60 per share and has a dividend yield of 3.1%. XP pays an annual dividend of $0.40 per share and has a dividend yield of 2.5%. Jefferies Financial Group pays out 44.7% of its earnings in the form of a dividend. XP pays out 22.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Jefferies Financial Group has raised its dividend for 2 consecutive years. Jefferies Financial Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

60.9% of Jefferies Financial Group shares are owned by institutional investors. Comparatively, 59.2% of XP shares are owned by institutional investors. 19.9% of Jefferies Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Jefferies Financial Group and XP”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Jefferies Financial Group	$10.82 billion	0.97	$710.47 million	$3.58	14.32
XP	$3.30 billion	2.64	$925.91 million	$1.81	8.94

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Jefferies Financial Group	7.58%	9.23%	1.34%
XP	27.40%	22.51%	1.34%

About Jefferies Financial Group

Jefferies Financial Group Inc. operates as an investment banking and capital markets firm in the Americas, Europe, the Middle East, and the Asia-Pacific. The company operates in two segments, Investment Banking and Capital Markets, and Asset Management. It provides investment banking, advisory services with respect to mergers or acquisitions, debt financing, restructurings or recapitalizations, and private capital advisory transactions; underwriting and placement services related to corporate debt, municipal bonds, mortgage-backed and asset-backed securities, equity and equity-linked securities, and loan syndication services; and corporate lending services. The company also offers financing, securities lending, and other prime brokerage services; equities research, sales, and trading services; wealth management services; and online foreign exchange trading services. In addition, it provides investment grade distressed debt securities, U.S. and European government and agency securities, municipal bonds, leveraged loans, emerging markets debt, and interest rate and credit index derivative products; and manages and offers services to a diverse group of alternative asset management platforms across a spectrum of investment strategies and asset classes. The company was formerly known as Leucadia National Corporation and changed its name to Jefferies Financial Group Inc. in May 2018. Jefferies Financial Group Inc. was founded in 1962 and is headquartered in New York, New York.

About XP

XP Inc. provides financial products and services in Brazil. It offers securities brokerage, private pension plans, commercial, and investment banking products, such as loan operations and transactions in the foreign exchange markets and deposits; product structuring and capital markets services for corporate clients and issuers of fixed income products; advisory services for mass-affluent and institutional clients; and wealth management services for high-net-worth customers and institutional clients. The company also offers XP Educação, an online financial education portal that offers seminars, classes, and learning tools to help teach individuals on topics, such as basics of investing, techniques, and investment strategies, as well as insurance brokerage services. In addition, it operates XP Platform, an open product platform that provides clients to access investment products in the market, including equity and fixed income securities, mutual and hedge funds, structured products, life insurance, pension plans, real-estate investment funds, and others. The company was founded in 2001 and is based in São Paulo, Brazil.