Legg Mason (LM) Struggles With Higher Costs & Outflows
Zacks Investment Research | Jun 13, 2017 10:59PM ET
On Jun 13, we issued an updated research report on Legg Mason, Inc. (NYSE:LM) . The company continues to remain under pressure due to persistent equity assets under management (AUM) outflows and escalating expenses.
Legg Mason’s shares have gained 26.7% over the last one year, outperforming the Zacks categorized Financial - Investment Management industry’s rally of 22.0%.
However, the company’s earnings estimates for fiscal 2018 and fiscal 2019 have been revised 3.8% and 6.6% downward, respectively, in the last 60 days. As a result, the stock currently carries a Zacks Rank #4 (Sell).
The company has been witnessing equity AUM outflows in the last few years because of poor investment management performance. The trend was also reflected in its fiscal 2017 results.
Regulations adopted by the Securities and Exchange Commission have become stricter and detrimental to the company’s business. Also, the current cyclical and secular pressure in the industry remains a major concern for Legg Mason.
However, it continues to undertake inorganic growth strategies on the back of its sound liquidity position. Also, its steady capital deployment activities are encouraging.
Stocks to Consider
Some better-ranked stocks in the same space include Lakeland Bancorp, Inc. (NASDAQ:LBAI) , Franklin Resources, Inc. (NYSE:BEN) and Lazard Ltd. (NYSE:LAZ) . All these stocks hold a Zacks Rank #2 (Buy). You can see .
Lakeland has witnessed an upward earnings estimate revision of 2.8% for the current year, in the past 60 days. Also, its share price jumped 82.4%, over the last one year.
Franklin’s earnings estimates have been revised upward by 3.6% for the current year, in the past 60 days. Also, over the last one year, its share price gained 36.4%.
Lazard has witnessed an upward earnings estimate revision of 3.3% for the current year, in the past 60 days. Its share price has gained 42.5% over the last one year.
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