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Lazard (LAZ) Q3 Earnings Beat on Lower Costs, Revenues Down
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Following the third-quarter 2020 results, shares of Lazard (LAZ - Free Report) have rallied 1.79%. The company delivered third-quarter adjusted earnings of 67 cents per share, surpassing the Zacks Consensus Estimate of 49 cents. The figure, however, came in lower than the prior-year quarter reported figure of 76 cents.
Results reflected controlled expenses and elevated financial advisory revenues. However, lower asset management revenues and overall net outflows were major drags.
Adjusted net income in the third quarter came in at $76 million, declining 14% year over year. On a GAAP basis, Lazard’s net income came in at $75 million or 66 cents per share compared with the $47 million or 40 cents recorded in the prior-year quarter.
Revenues Down, Costs Decline
In the third quarter, adjusted operating revenues came in at $569 million, down 3% year over year. This decline chiefly resulted from fall in asset-management and corporate revenues, partly offset by higher financial advisory revenues.
Adjusted operating expenses were $444.5 million in the quarter, down 4.1% year over year. Lower non-compensation expenses, partly offset by higher compensation and benefits, resulted in this decline.
Adjusted compensation and benefits expense flared up around 1%, on a year-over-year basis, to $341 million. Adjusted non-compensation expense for the quarter came in at $103 million, down 18% year over year.
The ratio of compensation expense to operating revenues was 60%, up from the year-earlier quarter’s 57.5%. The ratio of non-compensation expense to operating revenues was 18.1% compared with the year-ago quarter’s 21.3%.
The company affirmed its annual targets of an adjusted 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 percentage range.
Segment Performance
Financial Advisory: The segment’s total revenues came in at a record $307 million, up 1% from the year-earlier quarter, reflecting higher M&A and restructuring activities.
Asset Management: The segment’s total revenues were $261 million, down 8% from the prior-year quarter. Reduction in management and other fees resulted in this downside, partly offset by higher incentive fees.
Corporate: The segment generated revenues of $1 million compared with the $1.8 million recorded in the year-ago period.
Steady AUM
As of Sep 30, 2020, AUM was recorded at $228 billion, down 1% from the prior-year quarter. The quarter witnessed a market and foreign-exchange appreciation of $13.2 billion, along with net outflows of $201 million.
Average AUM came in at $226 billion, down 3% year over year.
Steady Stable Balance Sheet
Lazard’s cash and cash equivalents totaled $1.1 billion as of Sep 30, 2020, compared with $1.23 billion recorded as of Dec 31, 2019. The company’s stockholders’ equity was $778.7 million compared with $681.6 million as of Dec 31, 2019.
Capital-Deployment Activity
During the July-September period, the company paid dividend worth $49 million.
Our Viewpoint
Results reflect Lazard’s impressive performance during the September-end quarter. Though diverse footprint, steady capital-deployment activities and controlled expenses position the company favorably for the long haul, macro headwinds, revenue declines and overall outflows strained financials.
Cohen & Steers’ (CNS - Free Report) third-quarter 2020 adjusted earnings of 67 cents per share surpassed the Zacks Consensus Estimate of 60 cents. Moreover, the bottom line was 3.1% higher than the year-ago reported figure. Results primarily benefited from an improvement in revenues, partly offset by higher expenses. Despite net inflows, the company witnessed a marginal fall in AUM balance.
Franklin Resources Inc. (BEN - Free Report) reported fourth-quarter fiscal 2020 (ended Sep 30) adjusted earnings of 56 cents per share, which missed the Zacks Consensus Estimate of 69 cents. Results also compared unfavorably with the earnings of 71 cents per share recorded in the prior-year quarter. The company’s results displayed revenue growth, with support from solid rise in investment management fees during the quarter. Also, higher AUM was a positive. However, rise in expenses and net outflows were the undermining factors.
T. Rowe Price (TROW - Free Report) delivered third-quarter 2020 adjusted earnings per share of $2.55, which outpaced the Zacks Consensus Estimate of $2.53. The reported figure also climbed 19.7%, year on year. Results were driven by higher revenues, backed by an upsurge in investment advisory fees. Also, AUM improved. Nonetheless, escalating expenses were an undermining factor.
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The upcoming election could be a massive buying opportunity for savvy investors. Trillions of dollars will shift into new market sectors after the election. The question is, which sectors will soar for each candidate? Zacks has put together a new special report to help readers like you target big profits.
The 2020 Election Stock Report reveals specific stocks you’ll want to own immediately after the results are announced – 6 if Trump wins, 6 if Biden wins. Past election reports have led investors to gains of +71%, +83%, even +185% in the following months. This year’s picks could be even more lucrative.
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Lazard (LAZ) Q3 Earnings Beat on Lower Costs, Revenues Down
Following the third-quarter 2020 results, shares of Lazard (LAZ - Free Report) have rallied 1.79%. The company delivered third-quarter adjusted earnings of 67 cents per share, surpassing the Zacks Consensus Estimate of 49 cents. The figure, however, came in lower than the prior-year quarter reported figure of 76 cents.
Results reflected controlled expenses and elevated financial advisory revenues. However, lower asset management revenues and overall net outflows were major drags.
Adjusted net income in the third quarter came in at $76 million, declining 14% year over year. On a GAAP basis, Lazard’s net income came in at $75 million or 66 cents per share compared with the $47 million or 40 cents recorded in the prior-year quarter.
Revenues Down, Costs Decline
In the third quarter, adjusted operating revenues came in at $569 million, down 3% year over year. This decline chiefly resulted from fall in asset-management and corporate revenues, partly offset by higher financial advisory revenues.
Adjusted operating expenses were $444.5 million in the quarter, down 4.1% year over year. Lower non-compensation expenses, partly offset by higher compensation and benefits, resulted in this decline.
Adjusted compensation and benefits expense flared up around 1%, on a year-over-year basis, to $341 million. Adjusted non-compensation expense for the quarter came in at $103 million, down 18% year over year.
The ratio of compensation expense to operating revenues was 60%, up from the year-earlier quarter’s 57.5%. The ratio of non-compensation expense to operating revenues was 18.1% compared with the year-ago quarter’s 21.3%.
The company affirmed its annual targets of an adjusted 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 percentage range.
Segment Performance
Financial Advisory: The segment’s total revenues came in at a record $307 million, up 1% from the year-earlier quarter, reflecting higher M&A and restructuring activities.
Asset Management: The segment’s total revenues were $261 million, down 8% from the prior-year quarter. Reduction in management and other fees resulted in this downside, partly offset by higher incentive fees.
Corporate: The segment generated revenues of $1 million compared with the $1.8 million recorded in the year-ago period.
Steady AUM
As of Sep 30, 2020, AUM was recorded at $228 billion, down 1% from the prior-year quarter. The quarter witnessed a market and foreign-exchange appreciation of $13.2 billion, along with net outflows of $201 million.
Average AUM came in at $226 billion, down 3% year over year.
Steady Stable Balance Sheet
Lazard’s cash and cash equivalents totaled $1.1 billion as of Sep 30, 2020, compared with $1.23 billion recorded as of Dec 31, 2019. The company’s stockholders’ equity was $778.7 million compared with $681.6 million as of Dec 31, 2019.
Capital-Deployment Activity
During the July-September period, the company paid dividend worth $49 million.
Our Viewpoint
Results reflect Lazard’s impressive performance during the September-end quarter. Though diverse footprint, steady capital-deployment activities and controlled expenses position the company favorably for the long haul, macro headwinds, revenue declines and overall outflows strained financials.
Lazard Ltd Price, Consensus and EPS Surprise
Lazard Ltd price-consensus-eps-surprise-chart | Lazard Ltd Quote
Currently, Lazard carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Investment Managers
Cohen & Steers’ (CNS - Free Report) third-quarter 2020 adjusted earnings of 67 cents per share surpassed the Zacks Consensus Estimate of 60 cents. Moreover, the bottom line was 3.1% higher than the year-ago reported figure. Results primarily benefited from an improvement in revenues, partly offset by higher expenses. Despite net inflows, the company witnessed a marginal fall in AUM balance.
Franklin Resources Inc. (BEN - Free Report) reported fourth-quarter fiscal 2020 (ended Sep 30) adjusted earnings of 56 cents per share, which missed the Zacks Consensus Estimate of 69 cents. Results also compared unfavorably with the earnings of 71 cents per share recorded in the prior-year quarter. The company’s results displayed revenue growth, with support from solid rise in investment management fees during the quarter. Also, higher AUM was a positive. However, rise in expenses and net outflows were the undermining factors.
T. Rowe Price (TROW - Free Report) delivered third-quarter 2020 adjusted earnings per share of $2.55, which outpaced the Zacks Consensus Estimate of $2.53. The reported figure also climbed 19.7%, year on year. Results were driven by higher revenues, backed by an upsurge in investment advisory fees. Also, AUM improved. Nonetheless, escalating expenses were an undermining factor.
Have You Seen Zacks’ 2020 Election Stock Report?
The upcoming election could be a massive buying opportunity for savvy investors. Trillions of dollars will shift into new market sectors after the election. The question is, which sectors will soar for each candidate? Zacks has put together a new special report to help readers like you target big profits.
The 2020 Election Stock Report reveals specific stocks you’ll want to own immediately after the results are announced – 6 if Trump wins, 6 if Biden wins. Past election reports have led investors to gains of +71%, +83%, even +185% in the following months. This year’s picks could be even more lucrative.
Check out Zacks’ 2020 Election Stock Report >>