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Lazard (LAZ) Stock Up 4.2% on Q3 Earnings Beat, AUM Falls
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Lazard Ltd’s (LAZ - Free Report) shares have gained 4.2% since the release of its third-quarter 2022 results late last week. Adjusted net income per share of 1.05 surpassed the Zacks Consensus Estimate of 81 cents. The reported figure reflects 7% growth on a year-over-year basis.
The improved advisory business supported LAZ’s revenues during the quarter. Further, the company’s balance sheet position remains robust. However, higher expenses and a decline in assets under management (AUM) balance on weak market performance were the headwinds.
On a GAAP basis, Lazard’s net income came in at $106 million, down 1% from the prior-year quarter.
Revenues & Expenses Rise
Adjusted operating revenues totaled $723.6 million, up 3% year over year. This upswing was driven by an increase in financial advisor revenues. The top line also beat the Zacks Consensus Estimate of $638 million.
Adjusted operating expenses were $562.4 million, rising 5%. Adjusted compensation and benefits expenses were up 4% to $434.1 million, while non-compensation expenses in the quarter increased 10% to $128.3 million.
The ratio of adjusted compensation expenses to operating revenues was 60%, up from the year-earlier quarter’s 59.5%. The ratio of non-compensation expenses to operating revenues was 17.7%, up from the year-ago quarter’s 16.6%.
Quarterly Segment Performance
Financial Advisory: The segment’s adjusted operating revenues were $453.7 million, up 19% from the year-earlier quarter.
Asset Management: The segment’s adjusted operating revenues were $262.6 million, down 15% from the prior-year quarter.
Corporate: The segment’s adjusted operating revenues were $7.3 million, down 25%.
AUM Declines
As of Sep 30, 2022, total AUM was recorded at $197.8 billion, down 28% from the prior-year quarter. The quarter witnessed a market and foreign-exchange depreciation of $16.6 billion and net outflows of $2 billion.
Average AUM came in at $212.3 billion, down 24% year over year.
Balance Sheet Position Solid
Lazard’s cash and cash equivalents totaled $1 million as of Sep 30, 2022, compared with $1.47 billion as of Dec 31, 2021. The company’s stockholders’ equity was $677.3 million compared with $1.07 billion as of Dec 31, 2021.
Steady Capital-Deployment Activity
In the third quarter, Lazard repurchased $237 million worth of shares and paid $46 million in dividends.
As of Sep 30, 2022, the company’s remaining share repurchase authorization was $382 million.
Our Viewpoint
Lazard’s has a diversified business model, and it aligns comfortably with the current economic environment. Also, the capital deployment activities seem sustainable. However, the fall in AUM was an undermining factor.
BlackRock, Inc.’s (BLK - Free Report) third-quarter 2022 adjusted earnings of $9.55 per share surpassed the Zacks Consensus Estimate of $7.93. The figure reflects a decrease of 15.8% from the year-ago quarter.
Results benefited from a decline in expenses. However, lower revenues and assets under management (AUM) balance were the major headwinds for BLK.
Invesco’s (IVZ - Free Report) third-quarter 2022 adjusted earnings of 34 cents per share missed the Zacks Consensus Estimate of 43 cents by a significant margin. The bottom line plunged 55.8% from the prior-year quarter. Our estimate for earnings was 49 cents.
Results were adversely impacted by lower AUM balance and long-term outflows, which hurt revenues. However, a decline in operating expenses was a tailwind for Invesco.
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Lazard (LAZ) Stock Up 4.2% on Q3 Earnings Beat, AUM Falls
Lazard Ltd’s (LAZ - Free Report) shares have gained 4.2% since the release of its third-quarter 2022 results late last week. Adjusted net income per share of 1.05 surpassed the Zacks Consensus Estimate of 81 cents. The reported figure reflects 7% growth on a year-over-year basis.
The improved advisory business supported LAZ’s revenues during the quarter. Further, the company’s balance sheet position remains robust. However, higher expenses and a decline in assets under management (AUM) balance on weak market performance were the headwinds.
On a GAAP basis, Lazard’s net income came in at $106 million, down 1% from the prior-year quarter.
Revenues & Expenses Rise
Adjusted operating revenues totaled $723.6 million, up 3% year over year. This upswing was driven by an increase in financial advisor revenues. The top line also beat the Zacks Consensus Estimate of $638 million.
Adjusted operating expenses were $562.4 million, rising 5%. Adjusted compensation and benefits expenses were up 4% to $434.1 million, while non-compensation expenses in the quarter increased 10% to $128.3 million.
The ratio of adjusted compensation expenses to operating revenues was 60%, up from the year-earlier quarter’s 59.5%. The ratio of non-compensation expenses to operating revenues was 17.7%, up from the year-ago quarter’s 16.6%.
Quarterly Segment Performance
Financial Advisory: The segment’s adjusted operating revenues were $453.7 million, up 19% from the year-earlier quarter.
Asset Management: The segment’s adjusted operating revenues were $262.6 million, down 15% from the prior-year quarter.
Corporate: The segment’s adjusted operating revenues were $7.3 million, down 25%.
AUM Declines
As of Sep 30, 2022, total AUM was recorded at $197.8 billion, down 28% from the prior-year quarter. The quarter witnessed a market and foreign-exchange depreciation of $16.6 billion and net outflows of $2 billion.
Average AUM came in at $212.3 billion, down 24% year over year.
Balance Sheet Position Solid
Lazard’s cash and cash equivalents totaled $1 million as of Sep 30, 2022, compared with $1.47 billion as of Dec 31, 2021. The company’s stockholders’ equity was $677.3 million compared with $1.07 billion as of Dec 31, 2021.
Steady Capital-Deployment Activity
In the third quarter, Lazard repurchased $237 million worth of shares and paid $46 million in dividends.
As of Sep 30, 2022, the company’s remaining share repurchase authorization was $382 million.
Our Viewpoint
Lazard’s has a diversified business model, and it aligns comfortably with the current economic environment. Also, the capital deployment activities seem sustainable. However, the fall in AUM was an undermining factor.
Lazard Ltd Price, Consensus and EPS Surprise
Lazard Ltd price-consensus-eps-surprise-chart | Lazard Ltd Quote
Currently, Lazard carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Asset Managers
BlackRock, Inc.’s (BLK - Free Report) third-quarter 2022 adjusted earnings of $9.55 per share surpassed the Zacks Consensus Estimate of $7.93. The figure reflects a decrease of 15.8% from the year-ago quarter.
Results benefited from a decline in expenses. However, lower revenues and assets under management (AUM) balance were the major headwinds for BLK.
Invesco’s (IVZ - Free Report) third-quarter 2022 adjusted earnings of 34 cents per share missed the Zacks Consensus Estimate of 43 cents by a significant margin. The bottom line plunged 55.8% from the prior-year quarter. Our estimate for earnings was 49 cents.
Results were adversely impacted by lower AUM balance and long-term outflows, which hurt revenues. However, a decline in operating expenses was a tailwind for Invesco.