Amid global headwinds, the domestic market indeed looks a safer area for investments. We believe adding Lazard Ltd. LAZ to your investment portfolio seems a good idea now! Notably, the stock of this Bermuda based financial advisory and asset management firm, which gained over 5% year to date, continues to reflect strength in several areas.
5 Reasons Why Lazard is an Attractive Pick
Revenue Growth: Organic growth remains a key strength as operating revenues grew at a Compound Annual Growth Rate (CAGR) of 9% over the last three years (2012–2014). Continued strong growth in mergers and acquisition (M&A) activity has boosted financial advisory revenues. Notably, the number of completed M&A transactions with deal value over $500 million increased 7% year over year during the six months ended Jun 30, 2015. Further increase in assets under management (AUM) led to a 5% rise in asset management net revenue during the same time frame.
We expect a continued upward momentum in revenues as the company continues to see demand in its financial advisory business while expansion of its investment strategies will likely aid AUM growth.
Earnings Per Share Strength: Lazard’s earnings per share recorded a CAGR of nearly 24% over the last 5 years (2010–2014).
The earnings are expected to show an upswing in the near term as the company’s projected EPS growth (F1/F0) is 22.3% compared to the industry average rate of 3.6%. Also, the company recorded an average positive earnings surprise of 15% over the trailing four quarters.
Steady Capital Deployment: Lazard’s steady capital deployment activities indeed look impressive. The company has more than doubled its quarterly dividend since the beginning of 2010. Notably, the company hiked its quarterly cash dividend by 17% in Apr 2015. Also, the company paid a special dividend of $1.00 per Class A common stock and increased its authorization level by $150 million to $243 million in Feb 2015. Notably, the current dividend yield is 2.76%.
Favorable Zacks Rank: Lazard currently carries a Zacks Rank #2 (Buy). This is driven by upward estimate revisions over the last 30 days. For 2015, the Zacks Consensus Estimate moved up 9% to $3.91 per share.
Valuation Looks Reasonable: Lazard has a Value Style Score of ‘B’. The Value Style Score condenses all valuation metrics into one actionable score that helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount. Our research shows that stocks with Style Scores of ‘A’ or ‘B’ when combined with Zacks Rank of #1 (Strong Buy) or #2 offer the best upside potential.
Considering the above positive traits, we believe investing in Lazard should not disappoint you.
Other Stocks to Consider
Some other top-ranked stocks in the finance space include Regional Management Corp. RM, Great Southern Bancorp Inc. GSBC and Flagstar Bancorp Inc. FBC. All three stocks sport a Zacks Rank #1(Strong Buy).
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