With cost-reduction initiatives, a strong financial advisory and asset management segments, Lazard Ltd. LAZ appears a promising pick right now. Moreover, the company is well positioned to capitalize on the rising rate environment.
Lazard has been witnessing upward estimate revisions, reflecting analysts’ optimism. The stock has seen the Zacks Consensus Estimate for current-year earnings and the next year being revised 3.9% and 3.6% upward, respectively, over the last 60 days. As a result, the stock carries a Zacks Rank #2 (Buy).
Notably, Lazard has a number of other aspects that make it an attractive investment option.
5 Reasons Why Lazard is a Must Buy
Revenue Growth: Organic growth remains a key strength at Lazard, as displayed by its revenue growth trend. Though revenues declined in during the March-end quarter, operating revenues recorded a CAGR of 4.6% over the five-year period (2014-2018), with some annual volatility. Based on the strong team of indigenous professionals in the Financial Advisory segment and diversified assets under management (AUM) mix in the Asset Management segment, these segments are poised to drive the company’s overall revenue growth.
Earnings Per Share Strength: Lazard witnessed earnings growth of 7.8% in the last three-five years. In addition, the company’s long-term (three-five years) estimated EPS growth rate of 2.7% promises rewards for investors over the long run. Also, it recorded an average positive earnings surprise of 18.27%, over the trailing four quarters.
Prudent Expense Management: Lazard is diligently working on its cost-containment measures. In 2012, the company announced cost-reduction initiatives for which the full impact of the savings was reflected in 2014. During 2014, 2015, 2016, 2017 and 2018, the company reported GAAP-adjusted operating margins of 25.5%, 26.4%, 25%, 26.8% and 27.4%, respectively, versus the targeted 25%.
Superior Return on Equity (ROE): Lazard’s ROE of 48.17%, as compared with the industry average of 13.46%, reflects the company’s commendable position over its peers.
Stock Looks Undervalued: The stock seems undervalued when compared with the broader industry. Its current price-earnings (P/E) and price-to-cash flow ratios are lower than the respective industry averages.
Other Stocks to Consider
Franklin Resources, Inc. BEN has been witnessing upward estimate revisions for the last 60 days. Over the last six months, the company’s share price has been up more than 4%. Currently, it also carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Legg Mason, Inc. LM has been witnessing upward estimate revisions for the last 60 days. Additionally, the stock jumped more than 39% over the past six months. It currently sports a Zacks Rank of 1.
Ameriprise Financial, Inc. AMP has been witnessing upward estimate revisions for the last 60 days. Also, the company’s shares have risen nearly 34.2% over the last six months. It also holds a Zacks Rank of 2, at present.
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