6 Reasons To Add Lazard (LAZ) To Your Portfolio Right Now

Armed with cost-reduction initiatives, a strong financial advisory and asset management segments, Lazard Ltd. (NYSE:LAZ) appears a promising pick right now. Moreover, it is well-positioned to capitalize on the rising rate environment.

Lazard has been witnessing upward estimate revisions, reflecting analysts’ optimism. The stock has seen the Zacks Consensus Estimate for current-year earnings and that of 2018 being revised 2.6% and 1.4% upward, respectively, over the last 60 days. As a result, the stock carries a Zacks Rank #2 (Buy).

Shares of the company have widely outperformed the industry over the past three months. The stock has gained 11.8% compared with the industry’s rally of 8.2%.

Here’s What Might Drive the Stock Higher

Earnings Strength: Lazard recorded an earnings growth rate of 20.8% over the last five years compared with 3.9% of the industry it belongs to. The earnings growth rates for the current and the next year are anticipated to be 13.8% and 4.8%, respectively.

Further, the company has an impressive earnings surprise history, having outpaced the Zacks Consensus Estimate consistently in each of the trailing four quarters. The average beat was 14.2%. It also has a Growth Score of B.

Revenue Growth: Organic growth remains strong at Lazard. Revenues witnessed a compound annual growth rate of 5.1% over the last five years (2012-2016). Further, the top line is expected to increase 12.2% in 2017 compared with 7.3% growth estimated for the industry.

Favorable ROE: Lazard’s return on equity (ROE) supports growth potential. Its ROE of 38.81% compares favorably with the industry’s 11.75% average, implying that it is efficient in using its shareholders’ funds.

Prudent Expense Management: Lazard is diligently working on its cost-containment measures. In 2012, the company announced cost-reduction initiatives for which, the full impact of the savings was reflected in 2014. During 2014, 2015 and 2016, the company reported GAAP-adjusted operating margin of 25.5%, 26.4% and 25.0%, respectively, versus the targeted 25%.

Stock Looks Undervalued: The stock looks undervalued with respect to its price-to-earnings and price-to-sales ratios. Also, it has a Value Score of A.

Favorable VGM Score: Lazard has a VGM Score of A. Our research shows stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.

Other Stocks to Consider

Some other top-ranked stocks from the same space are Federated Investors (NYSE:FII) , Ameriprise Financial (NYSE:AMP) and BlackRock (NYSE:BLK) .

Federated Investors has witnessed a positive earnings estimate revision of 3.9% for the current year over the last 60 days. Its share price has rallied 16.2% in the past three months. The company sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ameriprise Financial has seen the Zacks Consensus Estimate for the current-year earnings being revised 6.9% upward over the last 60 days. The company’s share price has increased 15.8% in the past three months. The stock carries a Zacks Rank of #2.

BlackRock has witnessed an upward earnings estimate revision of 1.5% for the current year over the last 60 days. Its share price has risen 15.8% in the past three months. The company is a Zacks #2 Ranked player.

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