Lazard (LAZ) Or Waddell & Reed (WDR): Which Is A Better Pick?
Zacks Investment Research | Mar 10, 2020 11:06PM ET
Though benefits from a stabilizing economy and gradually improving interest-rate scenario have positioned the investment-management industry well, investment managers might have been affected by the recent Fed’s rate cuts.
With increasing chances of economic uncertainty on coronavirus concerns, most of the asset managers’ assets under management (AUM) numbers have been impacted in February on unfavorable market returns and net long-term outflows.
Nevertheless, with rates rising since 2016, most investment managers witnessed decline in fee waivers aiding top-line growth. Most asset managers recorded solid revenue growth in 2019 backed by increase in AUM, despite escalating compliance and technology costs.
Performance of equity markets remained favorable in the past year, as is evident from 5.1% growth of the S&P 500 Index, which might in turn support AUM.
Therefore, stocks with strong fundamentals and long-term potential can be worth considering. Here we are focusing on two investment managers, Waddell & Reed Financial, Inc. (NYSE:WDR) and Lazard Ltd. (NYSE:LAZ) .
Waddell & Reed, with a market cap of $842.8 million, provides a wide range of investment management and advisory services in the United States. Conversely, Lazard operates as a financial advisory and asset management firm globally and has a market cap of $3.1 billion.
Waddell & Reed currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A. Our research shows that 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.
Lazard sports a Zacks Rank #1 (Strong Buy) and has a industry 17% decrease. Shares of Waddell & Reed have lost around 28.9% in the same period. So, Lazard performed better than Waddell & Reed.
Dividend Yield
Both the companies have been deploying capital in terms of dividend payments to enhance shareholder value. Waddell & Reed and Lazard have current dividend yields of 7.79% and 5.81%, respectively.
Although both the stocks’ dividend yield is better than the industry’s average of 3.13%, shareholders of Waddell & Reed gain more.
Get The News You Want
Leverage Ratio
Waddell & Reed and Lazard have debt-to-equity ratios of 0.12 and 3.41, respectively, compared with the industry average of 0.20. Therefore, Waddell & Reed has an edge over Lazard.
Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholder’s funds. ROE in the trailing 12 months for Waddell & Reed and Lazard is 15.75% and 53.88%, respectively. While both the stocks have scored above the industry’s level of 13.86%, Lazard reinvests its earnings more efficiently.
Earnings Estimate Revisions & Growth Projections
The Zacks Consensus Estimate for 2020 earnings of Waddell & Reed has increased 10% over the past 60 days. The same for Lazard has increased 5.6% over the same time frame.
Earnings for Waddell & Reed for the current year indicate a 5.1% year-over-year jump. For Lazard, the Zacks Consensus Estimate for 2020 earnings stands at $3.76, indicating a year-over-year increase of 14.6%.
Therefore, Lazard has an edge here as well.
Conclusion
Our comparative analysis shows that Waddell & Reed is better positioned than Lazard in terms of dividend yield, leverage ratio and VGM Score. Lazard wins on reinvesting potential, earnings growth expectations and price performance.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Original post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.