On Feb 8, Zacks Investment Research upgraded Lazard Ltd. (LAZ) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Lazard has been witnessing rising earnings estimates on the back of strong fourth-quarter 2013 results, recent expansions and increase in common stock dividend. The asset manager has reported positive earnings surprises in 3 of the last 4 quarters, with an earnings beat of 23.49%. Moreover, the long-term expected earnings growth rate for this stock is 12%.
Lazard reported fourth-quarter 2013 adjusted earnings on Feb 5 with earnings per share of 81 cents, easily beating the Zacks Consensus Estimate of 60 cents by 35%. Moreover, the earnings outpaced the prior-year earnings of 61 cents by 32.8%.
Better-than-expected results were driven by strong top-line performance, which reflected 8% year-over-year growth. Moreover, the company’s strong capital position and higher assets under management (up 12% year over year) were the positives. However, elevated compensation and benefits expenses were a dampener.
Prior to the earnings release, Lazard Asset Management LLC, an indirect subsidiary of Lazard announced the opening of an office in Dubai, UAE. The company has recruited senior personnel, who will be responsible for catering to clients in the Middle East with investment solutions.
The latest move comes as an effort by Lazard to further strengthen its footprint in the Middle East and capitalize on its emerging market strategies and global research resources, thereby tapping more distribution and investment opportunities and enhancing the portfolio of emerging markets.
Further, last month, the board of Lazard approved a 20% increase in its quarterly cash dividend. The company will now pay a quarterly dividend of 30 cents per share against 25 cents a share distributed previously. The increased quarterly dividend will be paid on Feb 21, 2014 to shareholders of record as on Feb 10. Such capital deployment efforts are expected to further enhance investors’ confidence in the stock.
Following fourth-quarter 2013 results, 5 out of 8 estimates moved north, which pushed the Zacks Consensus Estimate for 2014 up by 4.4% to $2.61 per share, over the last 7 days. For 2015, the Zacks Consensus Estimate advanced 4.7% to $3.14 per share over the same time period, as 5 out of 8 estimates were revised higher.
Other Stocks to Consider
Some other investment managers worth considering include Waddell & Reed Financial, Inc. (WDR), Fortress Investment Group LLC (FIG) and Calamos Asset Management Inc. (CLMS). All 3 banks carry a Zacks Rank #1.