Lazard LtdLAZ continues to be one of the best-run diversified financial services company with a strong team of indigenous professionals in the Financial Advisory and Asset Management segments. The company has grown meaningfully over the years organically and through acquisitions. Further, its strength can be seen in multiple areas including a strong capital position, improving earnings performance and reducing expenses.
However, several matters including stricter regulations and risks due to geographical diversification pose near-term concerns for Lazard. Discounting these concerns, analysts remain optimistic about the company's near-term growth prospects. This is clearly evident from the upward earnings estimate revisions that the company has seen in the recent past.
Moreover, Lazard's stock increased 16.2% over the last six months, outperforming the 9.8% gain for the Zacks categorized Financial - Investment Management industry.
Key Factors to Support the Stock
Synergies from Acquisitions: Lazard has been involved in inorganic expansion for quite some time. It expanded the financial advisory business in North America with the acquisition of Canada-based Verus Partners. Also, by owning all stakes in MBA Lazard has strengthened its operations in Latin America and the global markets.
Uptrend in AUM : The company has witnessed an impressive growth in its AUM (assets under management) due to its investment strategies in global, local and emerging markets in both equities and fixed income. In 2016, AUM increased by 6%. This upward trend will continue in the quarters ahead along with the expected improvement in the market.
Efficient Expense Management: Lazard continues to achieve its cost containment targets and reported GAAP-adjusted operating margin of 25% in 2016. Further, the operating expenses declined 23% year over year in 2016.
Impressive Capital Deployment: In Apr 2016, the company hiked common stock dividend by 9%. Also, the board of directors approved an additional share repurchase of $236 million in Nov 2016. These reflect its capital strength and are likely to encourage investors.
Upward Estimate Revisions : The Zacks Consensus Estimate for the company's earnings has been revised 2.3% higher for the current year, over the last 60 days. As a result, the stock carries a Zacks Rank #2 (Buy). Moreover, Lazard has a Value Style Score of 'B'. Our research shows that stocks with Style Score of 'A' or 'B' when combined with Zacks Rank #1 (Strong Buy) or #2 offer the best upside potential.
Other Stocks that Warrant a Look
Independent Bank Corp. INDB witnessed an upward earnings estimate revision of 10.4% for the current year, in the past 60 days. Also, its share price is up 40.1%, over the last one year. It sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .
First Connecticut Bancorp, Inc. FBNK also sports a Zacks Rank #1. The company's earnings estimates have been revised 2.9% upward for the current year, in the past 60 days. Also, its share price surged 47.8%, over the last one year.
Apollo Global Management, LLC APO holds a Zacks Rank #2. It recorded an upward earnings estimate revision of 4.2% for the current year, in the past 60 days. Also, its share price has seen 34.9% rise over the last one year.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.