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Lazard (LAZ) Stock Up on Q2 Earnings & Revenue Beat, AUM Rises

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Lazard Ltd LAZ reported second-quarter 2021 adjusted earnings of $1.28 per share, beating the Zacks Consensus Estimate of 89 cents. The reported figure also reflects 91% year-over-year growth.

Higher revenues and growth in assets under management (AUM) favored the results. Most likely due to this, shares of the company gained 3.1%, following the earnings release.

Adjusted net income in the reported quarter was $145.9 million, up 94% year over year. On a GAAP basis, Lazard’s net income was $123 million or $1.08 per share compared with $73 million or 66 cents recorded in the prior-year quarter.

Revenues Rise, Expenses Flare Up

In the second quarter, adjusted operating revenues were a record $821 million, up 51% year over year. The upside resulted from an increase in asset management and financial advisory revenues. The reported figure also outpaced the Zacks Consensus Estimate of $644.5 million.

Adjusted operating expenses were $607.5 million in the quarter, up 42% year over year. Higher compensation and benefits resulted in the upsurge.

Adjusted compensation and benefits expenses rose 50% on a year-over-year basis to $488.8 million. Adjusted non-compensation expenses for the quarter were $118.8 million, up 19% year over year.

The ratio of compensation expenses to operating revenues was 59.5%, down from the year-earlier quarter’s 60%. The ratio of non-compensation expenses to operating revenues was 14.5% compared with the year-ago quarter’s 18.3%.

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 adjusted revenues were $471 million, up 61% from the year-earlier quarter.

Asset Management: The segment’s adjusted revenues were $342 million, up 40% from the prior-year quarter.

Corporate: The segment generated $6.9 million adjusted revenues, up 48% from the prior-year quarter.

Growing AUM

As of Jun 30, 2021, AUM was recorded at $277 billion, up 29% from the prior-year quarter. The quarter witnessed a market appreciation of $12 billion, foreign-exchange appreciation of $1.2 billion and net outflows of $0.8 billion.

Average AUM came in at $276 billion, up 32% year over year.

Deteriorating Balance Sheet

Lazard’s cash and cash equivalents totaled $980 million as of Jun 30, 2021, compared with $1.4 billion as of Dec 31, 2020. The company’s stockholders’ equity was $931.9 million compared with $999.4 million as of Dec 31, 2020.

Steady Capital-Deployment Activity

In the second quarter, Lazard repurchased 2.4 million shares at an average cost of $45.72 per share and paid out dividends of $50 million. As of the second-quarter end, the company had $366 million remaining in its share-repurchase authorization.

Our Viewpoint

Results reflect Lazard’s impressive performance in the June-end quarter. Although diverse footprint, steady capital-deployment activities and revenue growth position the company favorably for the long haul; macro headwinds, elevated expenses and overall outflows are straining its financials.

Lazard Ltd Price, Consensus and EPS Surprise

Lazard Ltd Price, Consensus and EPS Surprise
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.

Competitive Landscape

Affiliated Managers Group Inc.’s AMG second-quarter 2021 economic earnings of $4.03 per share surpassed the Zacks Consensus Estimate of $3.82. The bottom line grew 47.1% year over year.

Federated Hermes FHI reported second-quarter 2021 earnings per share of 67 cents, in line with the Zacks Consensus Estimate. The figure, however, compared unfavorably with the prior-year quarter earnings of 80 cents.

Ameriprise Financial’s AMP second-quarter 2021 adjusted operating earnings per share of $5.27 surpassed the Zacks Consensus Estimate of $5.23. The bottom line reflected a rise of 39.4% from the year-ago quarter. Notably, the prior-year quarter figure excluded net operating loss tax impacts.


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