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Why Lazard (LAZ) Is an Impressive Stock to Buy Right Now
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The third-quarter earnings cycle for most of the Finance sector companies has ended and the results released so far depict a strong improvement in the overall sector’s performance.
Lazard Ltd. (LAZ - Free Report) is one such Finance industry participant which came out with better-than-expected results. This Bermuda-based financial advisory and asset management firm experienced growth in both revenues and assets under management (AUM) during the third-quarter 2016.
Notably, shares of Lazard gained more than 14% on the NYSE during the last six months. The company continues to reflect strength in several areas, despite the challenging operating environment.
Organic Growth Strength: Revenues have been improving at Lazard, driven by a strong team of indigenous professionals in the Financial Advisory segment and diversified assets under management (AUM) mix in the Asset Management segment. The company recorded 3% year-over-year increase during third-quarter 2016, along with a rise of 6.8% CAGR over the last five years (2011–2015).
Recently, in Sep 2016, Lazard acquired Canada-based independent boutique – Verus Partners – to expand financial advisory in North America. Further, in Oct 2016, the company acquired its remaining 50% stake in MBA Lazard to strengthen operations in Latin America as well as global markets.
Uptrend in AUM: Lazard’s investment strategies in both equities and fixed income segment across global, local and emerging markets have resulted in improving its AUM. The company witnessed a 12% rise in AUM during the first nine months of 2016. Also, AUM increased at a CAGR of 11.8% over the last four years (2011–2014). With anticipated improvement in the market, this uptrend in AUM is likely to persist over the coming quarters.
Expense Management: The company remains focused on controlling costs. During the nine-month period ended Sep 30, 2016, operating expenses plunged by 33% on a year-over-year basis. Notably, in 2012, Lazard had announced cost-reduction initiatives for which the full impact of the savings was reflected in 2014. Further, during 2014 and 2015, the company had reported GAAP-adjusted operating margin of 25.5% and 26.4%, respectively, compared to a target of 25%. These achievements, meant for improving profitability with least impact on revenues, will likely bolster the company’s long-term top-line growth prospects.
Impressive capital deployment: Lazard remains committed toward enhancing its shareholders’ wealth. In Apr 2016, the company hiked its quarterly cash dividend by 9% and in Feb 2016, it declared a 20% increase in its special dividend. Further, recently the board of directors’ approved an additional share repurchase of $236 million, bringing the total amount to $400 million.
Upward Estimate Revision: The Zacks Consensus Estimate for the stock over the last 30 days moved upward by 9.7% to $1.02 per share for the current quarter and by 4.2% to $2.94 per share for the current year. This highlights analysts’ confidence over the stock. Moreover, Lazard has a Value Style Score of B and holds a Zacks Rank #2 (Buy). Our research shows that stocks with Style Scores of A or B when combined with Zacks Rank #1 (Strong Buy) or #2 offer the best upside potential.
Virtus Investment Partners, Inc. (VRTS - Free Report) also sports a Zacks Rank #1. The Zacks Consensus Estimate for the stock inched up 9.3% to $5.75 per share over the last 30 days for the current year.
Apollo Global Management, LLC (APO - Free Report) holds a Zacks rank #2. The Zacks Consensus Estimate for the stock improved 3.5% to $1.76 per share over the last 30 days for the current year.
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Why Lazard (LAZ) Is an Impressive Stock to Buy Right Now
The third-quarter earnings cycle for most of the Finance sector companies has ended and the results released so far depict a strong improvement in the overall sector’s performance.
Lazard Ltd. (LAZ - Free Report) is one such Finance industry participant which came out with better-than-expected results. This Bermuda-based financial advisory and asset management firm experienced growth in both revenues and assets under management (AUM) during the third-quarter 2016.
Notably, shares of Lazard gained more than 14% on the NYSE during the last six months. The company continues to reflect strength in several areas, despite the challenging operating environment.
LAZARD LTD Price
LAZARD LTD Price | LAZARD LTD Quote
Why the Price Rally May Continue
Organic Growth Strength: Revenues have been improving at Lazard, driven by a strong team of indigenous professionals in the Financial Advisory segment and diversified assets under management (AUM) mix in the Asset Management segment. The company recorded 3% year-over-year increase during third-quarter 2016, along with a rise of 6.8% CAGR over the last five years (2011–2015).
Recently, in Sep 2016, Lazard acquired Canada-based independent boutique – Verus Partners – to expand financial advisory in North America. Further, in Oct 2016, the company acquired its remaining 50% stake in MBA Lazard to strengthen operations in Latin America as well as global markets.
Uptrend in AUM: Lazard’s investment strategies in both equities and fixed income segment across global, local and emerging markets have resulted in improving its AUM. The company witnessed a 12% rise in AUM during the first nine months of 2016. Also, AUM increased at a CAGR of 11.8% over the last four years (2011–2014). With anticipated improvement in the market, this uptrend in AUM is likely to persist over the coming quarters.
Expense Management: The company remains focused on controlling costs. During the nine-month period ended Sep 30, 2016, operating expenses plunged by 33% on a year-over-year basis. Notably, in 2012, Lazard had announced cost-reduction initiatives for which the full impact of the savings was reflected in 2014. Further, during 2014 and 2015, the company had reported GAAP-adjusted operating margin of 25.5% and 26.4%, respectively, compared to a target of 25%. These achievements, meant for improving profitability with least impact on revenues, will likely bolster the company’s long-term top-line growth prospects.
Impressive capital deployment: Lazard remains committed toward enhancing its shareholders’ wealth. In Apr 2016, the company hiked its quarterly cash dividend by 9% and in Feb 2016, it declared a 20% increase in its special dividend. Further, recently the board of directors’ approved an additional share repurchase of $236 million, bringing the total amount to $400 million.
Upward Estimate Revision: The Zacks Consensus Estimate for the stock over the last 30 days moved upward by 9.7% to $1.02 per share for the current quarter and by 4.2% to $2.94 per share for the current year. This highlights analysts’ confidence over the stock. Moreover, Lazard has a Value Style Score of B and holds a Zacks Rank #2 (Buy). Our research shows that stocks with Style Scores of A or B when combined with Zacks Rank #1 (Strong Buy) or #2 offer the best upside potential.
Other Stocks that Warrant a Look
Woori Bank Co., Ltd. (WF - Free Report) sports a Zacks Rank #1. The Zacks Consensus Estimate for the stock moved upward 52.2% to $5.04 per share over the last 30 days for the current year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Virtus Investment Partners, Inc. (VRTS - Free Report) also sports a Zacks Rank #1. The Zacks Consensus Estimate for the stock inched up 9.3% to $5.75 per share over the last 30 days for the current year.
Apollo Global Management, LLC (APO - Free Report) holds a Zacks rank #2. The Zacks Consensus Estimate for the stock improved 3.5% to $1.76 per share over the last 30 days for the current year.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>