Lazard’s 20.2% return over the past six months has outpaced the S&P 500 by 6.8%, and its stock price has climbed to $51.32 per share. This was partly thanks to its solid quarterly results, and the run-up might have investors contemplating their next move.
Following the strength, is LAZ a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free for active Edge members.
Why Does Lazard Spark Debate?
Tracing its roots back to 1848 when it began as a dry goods merchant in New Orleans, Lazard (NYSE: LAZ) is a global financial advisory and asset management firm that provides strategic advice to corporations, governments, institutions, and wealthy individuals.
One Positive Attribute:
1. Stellar ROE Showcases Lucrative Growth Opportunities
Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.
Over the last five years, Lazard has averaged an ROE of 29%, exceptional for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows Lazard has a strong competitive moat.
One Reason to be Careful:
Long-Term Revenue Growth Disappoints
A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
Regrettably, Lazard’s revenue grew at a sluggish 4.4% compounded annual growth rate over the last five years. This wasn’t a great result compared to the rest of the financials sector, but there are still things to like about Lazard.
Final Judgment
Lazard has huge potential even though it has some open questions, and with its shares topping the market in recent months, the stock trades at 14.5× forward P/E (or $51.32 per share). Is now a good time to buy? See for yourself in our full research report, it’s free for active Edge members.
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