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Legg Mason's Organic Growth Back on Track - Analyst Blog

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On Jun 13, 2014, we issued an updated research report on Legg Mason Inc. ( LM ). This Maryland-based investment management company's organic growth strategy regained momentum as it witnessed overall inflows in assets under management (AUM) in fiscal 2014 after experiencing outflows in the past couple of years.

Net client inflows were $8.3 billion in fiscal 2014 compared with outflows of $11.7 billion and $27.5 billion in fiscal 2012 and 2013, respectively. Further, the company reported a 1.9% sequential rise in its AUM to $686.1 billion as of May 31, 2014. We remain encouraged owing to the company's successful efforts in driving inflows.

Recent actions of Legg Mason reflect its aim to grow through core operations while streamlining the business by divesting non-core operations. The company recently completed the acquisition of New York-based private asset manager QS Investors in order to expand its global investment products portfolio.

Further, Legg Mason recently announced that it has inked a deal with Missouri based brokerage firm Stifel Financial Corp. ( SF ) to sell its unit - Legg Mason Investment Counsel & Trust Co. (LMIC). The company believes that LMIC, which is engaged in providing investment advisory and trust services to retail as well as institutional clients, is no longer a strategic fit.

While Legg Mason will require some time to capitalize the full benefits, we believe it has adequate growth potential owing to its strategic deals.

Despite these positives, we believe there are certain concerns that may pose threats to the company's financials in the near term. These include volatile markets, low interest rate environment that affects the yield of money market funds and the prevailing stringent regulatory landscape.

Further, over the past 60 days, the Zacks Consensus Estimate declined 4.7% to $3.86 per share for fiscal 2015. Also, for fiscal 2016, it declined 2.5% to $4.67 per share.

Legg Mason currently carries a Zacks Rank #3 (Hold).

Stocks That Warrant a Look in the Sector

Cohen & Steers Inc. ( CNS ) and Woori Finance Holdings Co., Ltd . ( WF ) are better-ranked stocks in this space. Both the stocks sport a Zacks Rank #1 (Strong Buy).

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LEGG MASON INC (LM): Free Stock Analysis Report

WOORI FIN-ADR (WF): Get Free Report

STIFEL FINL (SF): Free Stock Analysis Report

COHEN&STRS INC (CNS): Free Stock Analysis Report

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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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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