Lazard has been on fire lately. In the past six months alone, the company’s stock price has rocketed 40%, reaching $48.82 per share. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Is there a buying opportunity in Lazard, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free for active Edge members.
Why Is Lazard Not Exciting?
We’re happy investors have made money, but we're cautious about Lazard. Here are two reasons you should be careful with LAZ and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
Regrettably, Lazard’s revenue grew at a sluggish 3.6% compounded annual growth rate over the last five years. This fell short of our benchmark for the financials sector.
2. EPS Trending Down
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Sadly for Lazard, its EPS declined by 2.9% annually over the last five years while its revenue grew by 3.6%. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
Lazard isn’t a terrible business, but it doesn’t pass our bar. Following the recent surge, the stock trades at 16.4× forward P/E (or $48.82 per share). Investors with a higher risk tolerance might like the company, but we don’t really see a big opportunity at the moment. We're pretty confident there are superior stocks to buy right now. Let us point you toward the Amazon and PayPal of Latin America.
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