Over the past six months, Lazard’s stock price fell to $44.64. Shareholders have lost 13.6% of their capital, which is disappointing considering the S&P 500 has climbed by 13.9%. This may have investors wondering how to approach the situation.
Is now the time to buy Lazard, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Do We Think Lazard Will Underperform?
Despite the more favorable entry price, we don’t have much confidence in Lazard. Here are two reasons we avoid LAZ, plus one stock we’d rather own.
1. Long-Term Revenue Growth Disappoints
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
Unfortunately, Lazard’s 1.3% annualized revenue growth over the last five years was weak. This fell short of our benchmarks.
2. EPS Trending Down
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Sadly for Lazard, its EPS declined by 15.8% annually over the last five years while its revenue grew by 1.3%. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
We see the value of companies driving economic growth, but in the case of Lazard, we’re out. After the recent drawdown, the stock trades at 13.7× forward P/E (or $44.64 per share). This multiple tells us a lot of good news is priced in - we think other companies feature superior fundamentals at the moment. We’d suggest looking at the most entrenched endpoint security platform on the market.
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