We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Shares of Lazard Ltd (LAZ - Free Report) declined 2.6% despite its first-quarter 2017 adjusted earnings of 83 cents per share, surpassing the Zacks Consensus Estimate by 3 cents. The reported figure compared favorably with 50 cents earned in the prior-year quarter.
Earnings were primarily driven by higher revenues. However, investors were perhaps disappointed with the higher operating expenses. However, assets under management (AUM) showed improvement.
Adjusted net income in the quarter came in at $110.1 million, up 65% year over year. On a GAAP basis, Lazard’s net income came in at $107.6 million or 81 cents per share, compared with $66.8 million or 50 cents per share in the year-earlier quarter.
Revenues Rise but Costs Escalate
Adjusted operating revenues for the quarter came in at $624.4 million, up 23% year over year. The upside can chiefly be attributed to an increase in financial advisory revenues as well as asset management revenues. Moreover, revenues easily surpassed the Zacks Consensus Estimate of $613 million.
Adjusted operating expenses were around $460.3 million in the quarter, up 15.2% year over year. Higher compensation and benefits expenses and non-compensation expenses were responsible for the increase.
Adjusted compensation and benefits expense jumped 18% on a year-over-year basis to $352.8 million. Adjusted non-compensation expense for the quarter was $107.5 million, up 6% year over year.
The ratio of compensation expense to operating revenues was 56.5% compared with 58.9% in the prior-year quarter. The ratio of non-compensation expense to operating revenues was 17.2% compared with 20.1% in the prior-year quarter.
The company maintains its annual target of non-compensation expense-to-revenue ratio between 16% and 20%, while the compensation-to-operating revenue ratio target is in the mid-to high 50% range.
Improved Segment Performance
Financial Advisory: The segment’s total revenue was $335.8 million, up 26% from the year-ago quarter. The rise was primarily due to an increase in strategic advisory and restructuring revenues.
Asset Management: The segment’s total revenue was $278.4 million, up 16% from the prior-year quarter. Higher management and incentive fees mainly led to the rise.
Corporate: The segment generated total revenue of $10.2 million, significantly up year over year.
AUM Improves
As of Mar 31, 2017, AUM was recorded at $215.2 billion, up 12.9% year over year. The company recorded net inflows of $3.3 billion during quarter. Additionally, the quarter experienced market and foreign exchange appreciation of roughly $14 billion.
Average AUM came in at $206 billion, up 11.7% year over year.
Balance Sheet
Lazard’s cash and cash equivalents were $8.9 billion as of Mar 31, 2017, compared with $1.2 billion as of Dec 31, 2016. The company’s stockholders’ equity was $1.2 billion, almost flat sequentially.
Capital Deployment Activity
During the quarter, Lazard returned $360 million to its shareholders. This included dividend payment of $192 million, share repurchase of $106 million and $62 million paid for meeting employee tax obligations in exchange of share issuances upon vesting of equity grants.
Our Viewpoint
While the company’s diverse footprint, steady capital deployment activities and top-line performance position it favorably for the long run, macro headwinds, escalating costs and stringent regulations will likely keep the company’s financials under pressure.
Invesco Ltd. (IVZ - Free Report) reported first-quarter 2017 adjusted earnings of 61 cents per share, surpassing the Zacks Consensus Estimate of 56 cents. Also, the bottom line came in 24.5% higher than the prior-year quarter.
Janus Capital Group, Inc. recorded a positive earnings surprise of 9.5% in first-quarter 2017. The company reported adjusted earnings per share of 23 cents, beating the Zacks Consensus Estimate of 21 cents. In addition, results came above the prior-year quarter figure of 19 cents.
Ameriprise Financial Inc. (AMP - Free Report) first-quarter 2017 operating earnings per share of $2.70 comfortably surpassed the Zacks Consensus Estimate of $2.52. Also, the figure represents a year-over-year increase of 24%.
Zacks' Hidden Trades While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them? Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trade>>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Lazard (LAZ) Stock Falls 2.6% Despite Q1 Earnings Beat
Shares of Lazard Ltd (LAZ - Free Report) declined 2.6% despite its first-quarter 2017 adjusted earnings of 83 cents per share, surpassing the Zacks Consensus Estimate by 3 cents. The reported figure compared favorably with 50 cents earned in the prior-year quarter.
Earnings were primarily driven by higher revenues. However, investors were perhaps disappointed with the higher operating expenses. However, assets under management (AUM) showed improvement.
Adjusted net income in the quarter came in at $110.1 million, up 65% year over year. On a GAAP basis, Lazard’s net income came in at $107.6 million or 81 cents per share, compared with $66.8 million or 50 cents per share in the year-earlier quarter.
Revenues Rise but Costs Escalate
Adjusted operating revenues for the quarter came in at $624.4 million, up 23% year over year. The upside can chiefly be attributed to an increase in financial advisory revenues as well as asset management revenues. Moreover, revenues easily surpassed the Zacks Consensus Estimate of $613 million.
Adjusted operating expenses were around $460.3 million in the quarter, up 15.2% year over year. Higher compensation and benefits expenses and non-compensation expenses were responsible for the increase.
Adjusted compensation and benefits expense jumped 18% on a year-over-year basis to $352.8 million. Adjusted non-compensation expense for the quarter was $107.5 million, up 6% year over year.
The ratio of compensation expense to operating revenues was 56.5% compared with 58.9% in the prior-year quarter. The ratio of non-compensation expense to operating revenues was 17.2% compared with 20.1% in the prior-year quarter.
The company maintains its annual target of non-compensation expense-to-revenue ratio between 16% and 20%, while the compensation-to-operating revenue ratio target is in the mid-to high 50% range.
Improved Segment Performance
Financial Advisory: The segment’s total revenue was $335.8 million, up 26% from the year-ago quarter. The rise was primarily due to an increase in strategic advisory and restructuring revenues.
Asset Management: The segment’s total revenue was $278.4 million, up 16% from the prior-year quarter. Higher management and incentive fees mainly led to the rise.
Corporate: The segment generated total revenue of $10.2 million, significantly up year over year.
AUM Improves
As of Mar 31, 2017, AUM was recorded at $215.2 billion, up 12.9% year over year. The company recorded net inflows of $3.3 billion during quarter. Additionally, the quarter experienced market and foreign exchange appreciation of roughly $14 billion.
Average AUM came in at $206 billion, up 11.7% year over year.
Balance Sheet
Lazard’s cash and cash equivalents were $8.9 billion as of Mar 31, 2017, compared with $1.2 billion as of Dec 31, 2016. The company’s stockholders’ equity was $1.2 billion, almost flat sequentially.
Capital Deployment Activity
During the quarter, Lazard returned $360 million to its shareholders. This included dividend payment of $192 million, share repurchase of $106 million and $62 million paid for meeting employee tax obligations in exchange of share issuances upon vesting of equity grants.
Our Viewpoint
While the company’s diverse footprint, steady capital deployment activities and top-line performance position it favorably for the long run, macro headwinds, escalating costs and stringent regulations will likely keep the company’s financials under pressure.
Lazard Ltd. Price, Consensus and EPS Surprise
Lazard Ltd. Price, Consensus and EPS Surprise | Lazard Ltd. Quote
Lazard currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Finance Stocks
Invesco Ltd. (IVZ - Free Report) reported first-quarter 2017 adjusted earnings of 61 cents per share, surpassing the Zacks Consensus Estimate of 56 cents. Also, the bottom line came in 24.5% higher than the prior-year quarter.
Janus Capital Group, Inc. recorded a positive earnings surprise of 9.5% in first-quarter 2017. The company reported adjusted earnings per share of 23 cents, beating the Zacks Consensus Estimate of 21 cents. In addition, results came above the prior-year quarter figure of 19 cents.
Ameriprise Financial Inc. (AMP - Free Report) first-quarter 2017 operating earnings per share of $2.70 comfortably surpassed the Zacks Consensus Estimate of $2.52. Also, the figure represents a year-over-year increase of 24%.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them? Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trade>>