Lazard Ltd. LAZ is well positioned to benefit from a healthy combination of organic and inorganic growth. Its cost-containment measures are also expected to boost the company’s long-term profitability, moving ahead. However, heavy reliance on overseas revenues might impede top-line growth.
The company’s shares have gained 10.7% over the past year compared to the industry’s decline of 0.3%.
Further, the Zacks Consensus Estimate for Lazard’s current-year earnings has been revised 2.5% upward in the last 60 days. The stock currently carries a Zacks Rank #2 (Buy).
Looking at the fundamentals, Lazard’s revenues witnessed a compound annual growth rate (CAGR) of 4.3% over a period of four years (2014-2017). The increasing trend continued into first-half 2018 as well. While diversified assets under management (AUM) contributed to the asset-management segment, the financial advisory segment’s growth was driven by a strong team of experienced professionals.
Lazard has also been trying to expand its operations globally through various acquisitions. Notably, in 2016, the company acquired Canada-based Verus Partners — an independent boutique. The company also acquired the remaining 50% stake in MBA Lazard — its financial advisory business in Latin America — to strengthen the bank’s operations in the region, as well as global markets.
Cost-reduction initiatives, announced in 2012, have favorably impacted the company’s operating margin. Since 2014, the operating margin has remained above Lazard’s targeted percentage of 25%. This has not only enhanced profitability, but will also be beneficial for the company’s long-term growth prospects, going forward.
Lazard’s AUM also witnessed a CAGR of 8.2% over a period of four years (2014-2017), with the trend continuing into the first half of 2018. Its investment strategies in the global, local and emerging markets in both equities and fixed income, led to this increment, which will likely continue further.
Other Stocks to Consider
Some other top-ranked stocks in the same space are AllianceBernstein Holding L.P. AB, Ameriprise Financial, Inc. AMP and Prospect Capital Corporation PSEC. All three stocks carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for AllianceBernstein’s current-year earnings has been revised 2.4% upward in the past 60 days. Its shares have rallied 26.7% over the past year.
Ameriprise Financial’s earnings estimates for 2018 inched up 1.7%, in 60 days’ time. Its shares have gained 1.5% in a year’s time.
Over the past 60 days, Prospect Capital’s 2018 earnings estimate moved 4% north. In the past year, the stock has appreciated 13.1%.
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