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About Lazard

You wish we were writing this stock analysis article on Goldman Sachs, Morgan Stanley, Barclays or some other famed investment bank, don’t you.

Well, not today.

Today, you’re stuck with a company that is a bit lesser known yet equally as interesting and important to the world of finance, Lazard.

Yes, we’ll admit that it does sound like the name of a fancy butler. 

“Lazard, would you be a dear and fetch me my gold timepiece? The one that I attained whilst wintering in Saint-Tropez?”

Insert a persnickety laugh in there somewhere to get the full effect.

So, we just established that we aren’t rich and fancy, but at least it was sort of funny.

Emphasis on “sort of.”

While jotting down an entire backstory of our fictitious butler would be fun, we think it might just be slightly more amusing, at least to us finance nerds, to write a stock analysis article on one of Wall Street’s most seasoned investment banks, Lazard.

Lazard is quite similar to other large investment banks in that it engages in both financial advisory as well as asset management.

On the financial advisory side of things, Lazard makes money through its advising of companies in matters related but not seemingly limited to mergers and acquisitions (M&A), restructurings, capital raising, capital structure and it has also apparently engaged in advising global governments in their affairs as well, such as with Greece and Ukraine. 

On the asset management side, Lazard has services where it essentially acts as a manager of a few different portfolios, in which its clients entrust their money.

The company seems to have a few different fund options including its US equity vehicle, global equity vehicle, vehicle for emerging markets investments along with a host of other investment avenues through which it invests its investor’s capital.

Lots of investing.

Lazard generates revenue primarily through the advisory fees that it assesses its clients, as is generally also the case with other investment banks.

At the end of the day, Lazard is an independent investment bank with prominent advisory and asset management capabilities, which isn’t far from the beaten path. 

Let’s really get down to business and see whether or not this company’s stock potentially has a lot to offer for those considering an investment in the company.

Lazard’s stock financials

The company currently has a share price of just north of $38, a market capitalization of $4.31 billion, a price-to-earnings (P/E) ratio of nearly 11 and to top things off, distributes an annual dividend of $2.00 to its shareholders.

All systems checked as Lazard’s stock (NYSE: LAZ) seems to be trading at a more than modest discount, as a P/E lower than 20 indicates that a stock is trading below what is considered fair value, thus, this company’s stock appears to be undervalued.

We also enjoy seeing that Lazard issues a healthy dividend as it is currently yielding nearly 5%.

As it pertains to the company’s balance sheet, Lazard’s executive team is responsible for handling and managing around $7.1 billion in total assets as well as in the neighborhood of $6.1 billion in total liabilities.

At first glance, we were a tad surprised to see that Lazard has a comparably high total amount of liabilities relative to total assets, however, upon further investigation it simply appears to be a norm for the other big players in the investment banking industry, for whatever reason. Therefore, we’re allayed by the fact that this seems to be a trend plaguing the investment banking industry as a whole and not so much a problem particularly facing Lazard.

We’re also happy to find that the company’s total assets outweigh its total liabilities, at any rate.

Moving right along to the company’s income statement, Lazard’s total revenue over the past five years has been as expected; boring and stable overall.

And we certainly don’t have any disdain for boring and stable.

The name of the game for a company such as Lazard is predictable fee collection over the long-term, which is exactly what you’re getting here, as can be seen through the company’s income statement. 

As a frame of reference, Lazard’s total revenue has remained in and ever so slightly around the $2.6 billion area code between 2017 and 2020, however, it can be noted that the company experienced somewhat of a spike between 2020 and 2021, as its total revenue took a step up to nearly $3.3 billion, as reported in 2021.

Nothing was likely special between 2020 and 2021, as this upturn in total annual revenue can most likely be attributed to incremental increases in the company’s fees given all of the cost headwinds faced by financial institutions alike, among many other businesses and industries, of course.

When it comes to the company’s cash flow statement, generating both positive and generally consistent net income and total cash from operations has been far from a challenge, as Lazard’s net income has stayed between $260 million (2017) and $543 million (2021) and its total cash from operations has also ranged between $576 million (2020) and around $1 billion (2017).

Consistency was what was expected within these three main financial statements and that’s exactly what we got.

Lazard’s stock fundamentals

When it comes to Lazard’s trailing twelve month (TTM) net profit margin, the investment bank outpaces the industry’s average by a notable amount. Specifically, according to TD Ameritrade’s platform the industry’s average TTM net profit margin stands at 13.98% whereas according to other sources Lazard’s TTM net profit margin was recently pegged at 16.93%.

The investment banking sphere is littered with fierce heavyweights and competitors ready to pounce on Lazard and others like there’s no tomorrow. However, even though this is the case Lazard has handsomely topped the industry’s average in terms of its TTM net profit margin which is no small accomplishment.

Lastly, as it relates to the company’s TTM returns on assets and investment, some assert Lazard’s recent TTM return on its investment(s) to be a whopping 20.09% whereas TD Ameritrade figures the industry’s average return as 6.33%.

This difference is clearly substantial and a good indicator that the company is generating more than solid returns on its investments and seemingly making good use of its resources overall.

Should you buy Lazard stock?

All things considered, this company doesn’t get a lot of press for how consistent it is, at least, from our perspective.

Unfortunately, that’s probably why the company doesn’t get a lot of attention.

Although it is a bit more economically sensitive than other companies and associated stocks that we’ve analyzed in the past given the nature of its business, if one had an inkling to look into companies within the financial services sector, Lazard’s diversified product offerings, strong trailing twelve month net profit margin, good balance sheet and consistent cash flow serves its purpose and then some.

We give the company’s stock a “buy” rating.

DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.