Posts in Extended Analysis

Air Lease Corporation Class A (AL) Extended Graph Analysis

February 13th, 2019 Posted by Extended Analysis 4 comments

Air Lease Corporation Class A (AL)

air-lease-corporation-al

About the Company

Company Profile

Air Lease Corporation Class A (AL) is a leading aircraft leasing company that was founded by aircraft leasing industry pioneer, Steven F. Udvar-Házy. The Company engages in purchasing new commercial jet transport aircraft directly from aircraft manufacturers. Such as The Boeing Company (“Boeing”) and Airbus S.A.S. (“Airbus”), and leasing those aircraft to airlines throughout the world. The company is based in the United States. Further, AL is headquartered in Los Angeles, California, USA. Moreover, the initial public offering (IPO) of Class A stock on the New York Stock Exchange on April 19, 2011, and in fact raised an estimated total of US $965.6 million.

AIR LEASE EXTENDED GRAPH ANALYSIS

A) AIR LEASE CASH FLOW

CASH FLOWS

Net Cash Flow provided by Operating Activities Net Cash used for Investing activities Net Cash (used for) financing activities Capital expenditure Free Cash Flow
2013 654,213,000 -2,185,894,000 1,571,765,000 -2,283,642,000 -1,629,429,000
2014 769,018,000 -1,805,657,000 1,049,285,000 -2,409,506,000 -1,640,488,000
2015 839,795,000 -2,152,801,000 1,186,862,000 -2,905,548,000 -2,065,753,000
2016 1,020,078,000 -2,005,516,000 1,103,565,000 -2,993,556,000 -1,973,478,000
2017 1,059,713,000 -2,143,951,000 1,101,640,000 -2,923,440,000 -1,863,727,000
TTM 1,178,181,000 -3,123,079,000 1,948,309,000 -3,545,839,000 -2,367,658,000

Facts:

  • Operating cash flow was $1.06 billion and $1.2 billion in 2017 and the trailing twelve months respectively.
  • Net cash used for investing activities was -$2.1 and $3.1 billion in 2017 and the trailing twelve months respectively.
  • On the other hand, net cash used for financing activities was $1.1 and $1.9 billion in 2017 and the trailing twelve months respectively.
  • Next, capital expenditure was -$2.9 and -$3.5 billion in 2017 and the trailing twelve months respectively.
  • Also, Free cash flow was -$1.9 and -$2.4 billion in 2017 and the trailing twelve months respectively.

Explanation

  • Operating cash flow shows that AL is successful in its operation by producing sufficient money for its growth.
  • On the other hand, net cash used for investing activities is consist of flight equipment under operating lease and payments for deposits on flight equipment purchases.
  • Moreover, the net cash used for financing activities is cash dividends paid and the acquisition of furnishings, equipment, and other assets.
  • Likewise, capital expenditures are:
    • $1.97 million – acquisition of flight equipment under operating lease.
    • $774k – payments on deposits on flight equipment purchases.
    • $177k – acquisition of aircraft furnishings, equipment, and other assets.
  • Moreover,  Free cash flow was negative in the last five years indicating that capital expenditures are higher than the operating cash flows. It might simply mean that AL is investing heavily in new equipment and other capital assets that cause excess cash to utilized.

Interpretation

As a result, Air Lease Corporation is liquid and has sa table cash flow in the past five years of its business operations.

 

B) AIR LEASE BALANCE SHEET

air-lease-corporation-al

Total Cash Current Asset Total Asset Current Liabilities Total Liabilities Equity Retained Earnings Total Debts Working Capital
2013 270,173,000 1,345,196,000 9,332,604,000 131,223,000 6,809,170,000 2,523,434,000 312,859,000 5,853,317,000 1,213,973,000
2014 282,819,000 1,427,422,000 10,774,784,000 190,952,000 8,002,722,000 2,772,062,000 555,573,000 6,714,362,000 1,236,470,000
2015 156,675,000 1,227,710,000 12,355,098,000 215,983,000 9,335,186,000 3,019,912,000 791,526,000 7,712,421,000 1,011,727,000
2016 274,802,000 1,565,478,000 13,975,616,000 256,775,000 10,593,429,000 3,382,187,000 1,143,311,000 8,713,874,000 1,308,703,000
2017 292,204,000 1,854,980,000 15,614,164,000 309,182,000 11,486,722,000 4,127,442,000 1,866,342,000 9,698,785,000 1,545,798,000

Facts:

  • Total cash were $275 and $292 million in 2016 and 2017 respectively.
  • And the current assets were $1.57 and $1.85 billion in 2016 and 2017 respectively.
  • Total assets were $13.98 and $18.6 billion in 2016 and 2017 respectively.
  • On the other hand, current liabilities were $256.8 and $309 million in 2016 and 2017 respectively.
  • Moreover, total liabilities were $1.59 and $11.49 billion in 2016 and 2017 respectively.
  • Consequently, the equities were $3.38 and $4.13 billion in 2016 and 2017 respectively.
  • In the same way, retained earnings were $1.14 and $1.87 billion in 2016 and 2017 respectively.
  • In addition, total debts were $8.71 and $8.7 billion in 2016 and 2017 respectively.
  • Similarly, working capitals were $1.31 and $1.55 billion in 2016 and 2017 respectively.

Explanation

  • Total cash has a growth of 8 percent in five years. Cash is 2 percent of total assets.
  • And also, current assets have a growth of 38 percent in five years. It is 12 percent of total assets.
  • Total assets have a growth of 67 percent in five years.
  • On the other hand, current liabilities increased 136 percent from 2013 to 2017. It is 3 percent of total liabilities.
  • Moreover, total liabilities increased by 69 percent from 2013 to 2017.
  • Likewise, equity had a growth of 64 percent in five years.
  • And also the retained earnings had a growth of 497 percent in five years and have a year-over-year growth averaging 60 percent.
  • Consequently, the total debt increased by 66 percent from 2013 to 2017.
  • Last, working capital was stable in the last five years at an average of $1.3 million indicating that AL was able to finance its short-term obligations. Further, it has a growth of 27 percent in five years.

Interpretation

AL is high leverage at nearly 400 percent. Its long-term debt represents 84 percent against total debt. Further, the debt was greater 43 percent against equity. However, its total assets were impressive and increase year-over-year in five years. Finally, the company’s balance sheet was stable and sound.

 

C) AIR LEASE FINANCIAL RATIOS

air-lease-corporation-class-a-al

2011 2012 2013 2014 2015 2016 2017 TTM
Asset Turnover (Average) 0.06 0.10 0.10 0.10 0.11 0.11 0.10 0.10
Return on Assets % 1.03 2.11 2.28 2.55 2.19 2.85 5.11 5.20
Financial Leverage (Average) 2.37 3.15 3.70 3.89 4.09 4.13 3.78 3.92
Return on Equity % 2.45 5.85 7.84 9.67 8.75 11.71 20.14 20.74
Return on Invested Capital % 1.84 3.65 3.97 4.27 4.01 4.73 7.35 7.28
Interest Coverage 2.44 2.56 2.73 3.05 2.67 3.27 3.36 3.19

Facts

  • The asset turnover ratio is averaging 0.10 in 2017 and the trailing twelve months.
  • Return on assets was 5.11 and 5.20 percent in 2017 and the trailing twelve months.
  • Moreover, Financial leverage is averaging 3.78 and 3.92 in 2017 and the trailing twelve months.
  • In addition, Return on equity was 20.14 and 20.74 in 2017 and the trailing twelve months.
  • Likewise, Return on invested capital was 7.35 and 7.28 percent in 2017 and the trailing twelve months.
  • And the interest coverage was 3.36 and 3.19 in 2017 and the trailing twelve months.

Explanation

  • Asset turnover ratio means that each dollar of assets generates an average of 10 cents of sales.
  • The return on assets (ROA) indicates that for every dollar that was invested in assets produced $51.10 and $52 of net income in 2017 and the trailing twelve months respectively.
  • On the other hand, financial leverage indicates that AL’s liabilities are 378 and 392 percent of shareholders’ equity in 2017 and the trailing twelve months respectively, which are high.
  • Return on equity indicates that every dollar of common shareholders’ equity earned $20.14 and $20.74 in 2017 and the trailing twelve months respectively. In other terms, shareholders earned 2014 percent return on their investment.
  • Return on invested capital indicates that for every dollar invested in capital produces a $0.0735 and $0.0728 cents returns in 2017 and the trailing twelve months respectively.
  • Lastly, interest coverage means that AL 3.36 and 3.19 times more earnings than its current interest payments in 2017 and the trailing twelve months respectively.

Interpretation

Overall, efficiency and profitability ratios show positive results although financial leverage has a high ratio. Further, it indicates that debt is used effectively to convert capital to earned profits. Furthermore, the company is capable to pay its interest on debt with its principal.

 

D) AIR LEASE INCOME AND MARKET

air-lease-corporation-al

Sales EBIT Net Income Market Cap Intrinsic Value
2013 858,675,000 485,812,000 190,411,000 3,222,000,000 712,340,1357
2014 1,050,493,000 615,366,000 255,998,000 3,576,000,000 2,097,085,219
2015 1,222,840,000 731,097,000 253,391,000 3,434,000,000 2,900,818,643
2016 1,419,055,000 866,439,000 374,925,000 3,531,000,000 3,601,547,148
2017 1,516,380,000 896,901,000 756,152,000 4,983,000,000 14,180,694,017
TTM 1,628,192,000 953,981,000 843,538,000 3,351,000,000 12,118,551,202

Facts:

  • Sales were $1.5 billion and $1.6 billion in 2017 and 2018 TTM respectively.
  • And the EBIT was $896.9 million and $954 million in 2017 and 2018 TTM respectively.
  • Net Income was $756 million and $843.5 million in 2017 and 2018 TTM respectively.
  • Further, the market capitalization was $4.98 billion and $3.351 billion in 2017 and 2018 TTM respectively.
  • Likewise, intrinsic value was $14.181 and $12,119 billion in 2017 and 2018 TTM respectively.

Explanation:

  • The sales growth was 90 percent in five years and increases year-over-year at an average of 14 percent.
  • And the EBIT growth was 96 percent in five years and increases year-over-year at an average of 15 percent.
  • Moreover, the net income has a growth of 343 percent in five years and increases year-over-year at an average of 39 percent, except in 2015 to 2016 where the growth was -1.02 percent.
  • On the other hand, market capitalization has a growth of 4 percent in five years and the year-over-year growth was averaging 3.64 percent. It suffered negative growth in 2016 at 4 percent and the trailing twelve months at 32.75 percent.
  • Further, the intrinsic value was 185 and 185 percent above the market cap in 2017 and 2018 TTM respectively.

Interpretation

AL management has managed to utilize its assets to produce sufficient revenue for the operation of the business in the last five years. As a result, the company is profitable. Moreover, its intrinsic value was higher than the market cap indicating that the stock price of AL was trading at an undervalued price.

 

E) AIR LEASE KEY EXECUTIVE COMPENSATION

air-lease-corporation-al

SUMMARY

Executive 2013 2014 2015 2016 2017 (2017) %
Key Executive Compensation 24,969,215 26,494,168 24,748,889 27,000,783 24,568,646 100.00%
Steven F. Udvar-Hazy – Exec Chairman of the Board 9,122,086 9,674,429 9,079,933 9,686,620 7,924,666 32.26%
John L. Plueger – CEO and President 7,122,845 7,482,030 7,012,942 7,785,065 8,076,572 32.87%
Gregory B. Willis – CFO and EVP 1,277,367 1,554,217 1,923,635 2,272,815 2,202,488 8.96%
Jie Chen – EVP and Managing Director of Asia 4,163,116 4,369,772 3,671,083 3,881,834 3,323,377 13.53%
Grant A. Levy – EVP 3,283,801 3,413,720 3,061,296 3,374,449 3,041,543 12.38%

DETAILED DISTRIBUTION

Key Executive Compensation

2013 2014 2015 2016 2017 % 2017
Salary 5,351,865 5,443,304 5,508,251 5,335,625 5,153,417 20.98%
Bonus 1,492,816 1,017,497 1,337,132 1,730,618 0
Restricted Stock Award 7,866,680 9,097,027 10,348,203 9,565,268 11,819,083 48.11%
Non-Equity Compensation 9,936,909 10,569,427 7,220,411 9,882,069 7,029,850 28.61%
Other Compensation 320,945 366,913 334,892 487,203 566,296 2.30%
Total 24,969,215 26,494,168 24,748,889 27,000,783 24,568,646 100.00%

Steven F. Udvar-Hazy – Exec Chairman of the Board

Salary 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 22.71%
Bonus 526,291 347,328 456,840 649,801 0
Restricted Stock Award 3,376,861 3,897,384 4,316,339 3,817,607 3,267,474 41.23%
Non-Equity Compensation 3,276,000 3,420,000 2,340,000 3,132,000 2,548,000 32.15%
Other Compensation 142,934 209,717 166,754 287,212 308,392 3.89%
Total 9,122,086 9,674,429 9,079,933 9,686,620 7,924,666 100.00%

John L. Plueger – CEO and President

Salary 1,500,000 1,500,000 1,500,000 1,250,000 1,000,000 12.38%
Bonus 410,561 258,552 380,700 541,500 0
Restricted Stock Award 2,412,042 2,793,105 3,093,352 3,279,398 5,145,622 63.71%
Non-Equity Compensation 2,730,000 2,850,000 1,950,000 2,610,000 1,770,000 21.92%
Other Compensation 70,242 80,373 88,890 104,167 160,950 1.99%
Total 7,122,845 7,482,030 7,012,942 7,785,065 8,076,572 100.00%

Gregory B. Willis – CFO and EVP

Salary 401,969 443,333 491,667 555,917 606,417 27.53%
Bonus 25,886 43,969 67,085 83,875 0
Restricted Stock Award 306,571 409,224 763,157 485,301 818,496 37.16%
Non-Equity Compensation 492,492 641,250 585,000 1,126,389 755,790 100.00%
Other Compensation 50,449 16,441 16,726 21,333 21,785 0.99%
Total 1,277,367 1,554,217 1,923,635 2,272,815 2,202,488 100.00%

Jie Chen – EVP and Managing Director of Asia

Salary 876,563 905,596 914,167 920,833 928,667 27.94%
Bonus 303,148 228,500 246,881 259,003 0 0.00%
Restricted Stock Award 930,018 1,063,983 1,229,799 1,060,523 1,369,522 41.21%
Non-Equity Compensation 2,027,917 2,141,502 1,248,975 1,604,280 987,660 29.72%
Other Compensation 25,470 30,191 31,261 37,195 37,528 1.13%
Total 4,163,116 4,369,772 3,671,083 3,881,834 3,323,377 100.00%

Grant A. Levy – EVP

Salary 773,333 794,375 802,417 808,875 818,333 26.91%
Bonus 226,930 139,148 185,626 196,439 0
Restricted Stock Award 841,188 933,331 945,556 922,439 1,217,969 40.04%
Non-Equity Compensation 1,410,500 1,516,675 1,096,436 1,409,400 967,600 31.81%
Other Compensation 31,850 30,191 31,261 37,296 37,641 1.24%
Total 3,283,801 3,413,720 3,061,296 3,374,449 3,041,543 100.00%

Facts:

In 2017:

  • Total key executive compensation was $24.57 million.
  • And Steven F. Udvar-Hazy total compensation was $7.92 million.
  • John L Plueger total compensation was $8.08 million.
  • Gregory B. Willis total compensation was $2.20 million.
  • Jie Chen total compensation was $3.23 million.
  • Grant A. Levy total compensation was $3.04 million.

Explanation

  • The total key executive compensation represents 3.25 percent of the total net income in 2017.
  • And Steven F. Udvar-Hazy total compensation represents 32.26 percent of the total key executive compensation, in which 22.71 percent is salary or equivalent to $1.8 million.
  • Further, John L. Plueger total compensation represents 32.86 percent of the total key executive compensation in which 12.38 percent is salary equivalent to $1.0 million.
  • Likewise, Gregory B. Willis total compensation represents 8.96 percent of the total key executive compensation in which 27.53 percent is salary or equivalent to $606k.
  • Next is Jie Chen total compensation represents 13.53 percent of the total key executive compensation in which 27.94 percent is salary or equivalent to $929k.
  • Similarly, Grant A. Levy total compensation represents 12.38 percent of the total key executive compensation in which 26.91 percent is salary or equivalent to $818k.

Interpretation

The total key executive compensation is averaging $25.6 million in five years comparing to the average 5-year net income of $366 million. Therefore, it indicates that the total executive compensation is 7 percent of the average net income.

 

F) LOBBYING/CONTRIBUTIONS TO POLITICIANS

There is no record of lobbying found for Air Lease Corporation (AL).

Search Results

No lobbying income or spending found.

This may be because no lobbying was reported, because the lobbying contract was terminated, or because reported lobbying was less than the $10,000 threshold that allows us to build a profile. The Center for Responsive Politics conservatively assumes any lobbying under the $10,000 threshold to be $0 earned or spent. Please click on “View Report Images” on the tab navigation bar to see if this firm or client has filed any reports.

NOTE: All lobbying expenditures on this page come from the Senate Office of Public Records. Data for the most recent year was downloaded on October 24, 2018.

 

G) AIR LEASE FINANCIAL STRENGTH

air-lease-corporation-al

Data:

Working Capital Total Assets Sales EBIT Market Value of Equity Book Value of Total Liabilities Retained Earnings
1,545,798,000 15,614,164,000 1,629,374,000 953,981,000 4,127,442,000 11,486,722,000 1,866,342,000

Formula:

Z-Score =  1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Calculation Ratio Z-Score Result
A – Working Capital/Total Assets 0.10 1.2 0.12
B – Retained Earnings/Total Assets 0.12 1.4 0.17
C – EBIT/Total Assets 0.06 3.3 0.20
D – Market Value of Equity/Book Value of Total Liabilities 0.36 0.6 0.22
E-Sales/Total Assets 0.10 1.0 0.10
Z-Score 0.81

The above Z-Score is computed as follows:  Z-Score =  1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Facts:

  • A –  0.10 * 1.2 = 0.12
  • B – 0.12 * 1.4 = 0.17
  • C – 0.06 * 3.3 = 0.20
  • D – 0.36 * 0.6 = 0.22
  • E – 0.10 * 1.0 = 0.10
  • Z-Score = 0.81  

Explanation

Z-Score is a mathematical measurement that is used to compare data points from different sets of data to arrive at the relationship to the mean. Moreover, this impression is often known as the Altman Z-Score. This measurement was used to forecast the likelihood of the company would go bankrupt.

Interpretation

The Z-Score of AL is below 1.0 which is 0.81. Typically a score of 0 – 1.8 is more likely the company will declare bankruptcy. Alarming isn’t it. But wait let us go deeper and interpret it with care.

Let us note that, this statistical measurement sums several weighted financial ratios and compare it to the scale shown above  A, B, C, D & E. The profitability, liquidity, leverage, and efficiency is the main factors of this measurement. Hence, total assets are the denominator in four equations, therefore, total assets represent a huge percentage on all the ratios, the result is obviously low.  

In addition, analyzing this kind of industry, AL is an intensive industry which requires a huge amount of capital investment to run its business effectively. Further, AL invested heavily in property, plant, and equipment and in the last five years the company has never suffered a loss in its operation and is considered to be profitable.

In conclusion

Air Lease Corporation (AL)  has sound financial health and is profitable in the past five years. Debt is greater than equity and the leverage ratio is high at nearly 400 percent. And also, the company is investing heavily in equipment. Significantly, the management or the leaders of AL has a satisfactory strategic method in running the operation of the business for its growth and development. AL doesn’t have any expenses in lobbying. Moreover, AL has not failed in the past five years based on all the test and valuation made for AL above. As a result, I believe that Air Lease Corporation (AL) can be a good candidate for investment, therefore, I recommend a BUY on the stock of AL.

 

CITATION

https://www.sec.gov/cgi-bin/browse-edgar?CIK=AL&owner=exclude&action=getcompany

https://www.morningstar.com/

https://finance.yahoo.com/

https://airleasecorp.com/

https://en.wikipedia.org/wiki/Air_Lease_Corporation

https://www.opensecrets.org/lobby/lookup.php

https://www.opensecrets.org/industries/alphalist.php

Researched and written by Criselda

Twitter: criseldarome

Lazard Ltd Shs A (LAZ) Extended Graph Analysis

June 10th, 2017 Posted by Extended Analysis No Comment yet

Lazard Company Profile

Lazard Ltd Shs A (LAZ) is a financial advisory and asset management firm. The company has a diverse set of clients around the globe including corporations, governments, institutions, partnership, and individuals. The company is currently operating from 42 cities in key business and financial centers across 27 countries throughout North America, Europe, Asia, Australia, the Middle East, and Central and South America. Moreover, LAZ has 2,610 employees as of 2015.

LAZ logo

Lazard Ltd Shs A (LAZ) Extended Graph Analysis

A. LAZ CASH FLOW

LAZ CF

  Net cash provided by operating activities Net cash used for investing activities Net cash provided (used for) financing activities Capital expenditure Free Cash Flow
2011 397,277,000 -45,277,000 -552,359,000 -45,277,000 442,554,000
2012 481,908,000 -84,933,000 -563,220,000 -84,933,000 566,841,000
2013 526,697,000 -54,553,000 -487,072,000 -54,553,000 581,250,000
2014 736,017,000 20,099,000 -435,369,000 -20,099,000 715,918,000
2015 887,296,000 -25,952,000 -746,804,000 -25,952,000 913,248,000
2016 601,287,000 -37,653,000 -486,952,000 -37,653,000 638,940,000
2017 795,561,000 -36,015,000 -519,117,000 -36,015,000 831,576,000

Facts:

  • Cash from operating activities is $795.6 million.
  • And the cash from investing activities is -$36  million.
  • In addition, the net cash provided by (used for) financing activities is -$519 million.
  • While, capital expenditure is -$36 million.
  • Likewise, free cash flow is $831.6 million.

Explanation:

  • The five years of growth of cash from operating activities was 100 percent.
  • Net cash used for investing activities are purchases of property, plant, and equipment.
  • In addition, the net cash used for financing activities is long-term debt repayment, repurchase of treasury stock, and cash dividend payments.
  • While, capital expenditures are purchases of property, plant, and equipment.
  • Likewise, free cash flow has 88 percent growth in five years.

Interpretation

Lazard is capable of generating sufficient cash for its business operation.

Summary

Overall, Lazard is generating sufficient cash revenue for the business operation. In addition, the company was able to purchase properties, plant, and equipment for the operations. Moreover, the company was able to pay their long-term debt, repurchase treasury stock and cash dividend payments. Finally, free cash flow is growing.

B. LAZ BALANCE SHEET

LAZ BS

  Cash and Cash Equivalent Current Assets Total Assets Current Liabilities Total liabilities Equity Retained Earnings Total Debt Working Capital
2011 1,289,828,000 2,377,564,000 3,081,936,000 294,502,000 2,355,793,000 726,143,000 258,646,000 1,076,850,000 2,083,062,000
2012 1,142,684,000 2,100,632,000 2,986,893,000 273,411,000 2,417,237,000 569,656,000 182,647,000 1,076,850,000 1,827,221,000
2013 1,086,361,000 2,139,187,000 3,011,137,000 280,465,000 2,450,928,000 560,209,000 203,236,000 1,048,350,000 1,858,722,000
2014 1,274,340,000 2,487,802,000 3,332,236,000 336,178,000 2,625,492,000 706,744,000 464,655,000 1,048,350,000 2,151,624,000
2015 1,521,944,000 2,596,016,000 4,486,766,000 506,665,000 3,173,311,000 1,313,455,000 1,123,728,000 998,350,000 2,089,351,000
2016 853,887,000 1,889,508,000 4,302,303,000 587,059,000 3,001,161,000 1,301,161,000 1,058,189,000 990,488,000 1,302,449,000

Facts:

  • Cash and cash equivalent was $853.9 million in 2016.
  • And the current assets were $1.9 billion IN 2016.
  • In addition, total assets were $4.3 billion IN 2016.
  • While the current liabilities were $587 million IN 2016.
  • On the other hand, total liabilities were $3.0 billion IN 2016.
  • Moreover, retained earnings were $1.1 billion IN 2016.
  • And total equity was $1.3 billion IN 2016.
  • Rather, working capital was $1.3 billion IN 2016.
  • Total debt was $1.2 billion IN 2016.

Explanation:

  • Cash and cash equivalent have negative growth of 34 percent from 2011 at $436 million.
  • And the current assets have negative growth of 21 percent from 2011 at $488 billion.
  • Likewise, total assets have grown 40 percent in 2011 at $1.2 billion.
  • On the other hand, current liabilities increased by 99 percent from 2011 at $293 million.
  • And the total liabilities increased by 27 percent from 2011 at $645 million.
  • In addition, retained earnings had increased by 309 percent from 2011 at $800 million.
  • Similarly, total equity had increased by 79 percent from 2011 at $575 million.
  • And the working capital was erratic in movement and has decreased 37 percent from 2011 at $781 million.
  • Finally, the total debt had decreased by 8 percent from 2011 at $86 million.

Interpretation

As a result, the company is financially healthy and stable in the last six years of its business operations.

Summary

Overall, LAZ is liquid and capable of paying its short-term financial obligations using its cash and cash equivalents. Although its liability/equity ratio is 72/28 percent, respectively, meaning the company is using more of borrowed funds in its capital structures, in other words, creditors have more stake in the assets of the company than the investors. Moreover, total assets, retained earnings and equity were increasing year-over-year from 2012.

C. LAZ RATIOS

LAZ RATIOS

  Operating Margin Net Margin Return on Assets Return on Equity Asset Turnover Financial Leverage Debt to Equity
2011 12.90 9.56 5.38 25.38 0.56 4.24 1.51
2012 6.50 4.41 2.78 13.01 0.63 5.24 1.92
2013 10.90 8.07 5.34 28.36 0.66 5.38 1.90
2014 22.60 18.57 13.47 67.45 0.73 4.71 1.50
2015 -0.70 41.91 25.23 97.65 0.60 3.41 0.77
2016 22.20 16.62 8.57 30.41 0.52 3.69 0.97
2017 23.20 17.43 10.20 36.96 0.59 3.80 1.04

Facts:

  • The current operating margin is 23 percent; averaging 14 percent from 2011.
  • And the net margin was 17.43 percent; averaging 17 percent from 2011.
  • In addition, return on assets was 10.20 percent; averaging 10.14 percent from 2011.
  • Likewise, return on equity was 36.96 percent; averaging 43 percent from 2011.
  • Further, asset turnover was 0.59, averaging 0.61 from 2011.
  • And the debt to equity was 1.37; decreased by 0.47 from 2011 and averaging 1.37.
  • Financial leverage was 3.80; decreased by 0.44 from 2011 and averaging 4.35.

Explanation

  • Operating margin shows that management is efficient and shows a decent leftover on revenue after deducting operating costs.
  • And the net margin shows a decent return on revenue after deducting all expenses.
  • On the other hand, return on assets shows a return of 10 cents for every dollar invested in assets.
  • Moreover, return on equity shows a return of 37 percent on investments made in the stocks of LAZ.
  • Likewise, asset turnover shows that LAZ is generating 59 cents of net sales for every dollar invested in the assets.
  • While debt to equity shows that more assets are financed by debt than those financed by investors.
  • Hence, financial leverage is total assets over stockholders equity. LAZ uses more debt in its capital structure.

Interpretation

It indicates that LAZ is profitable, however, the company is utilizing more on borrowed funds to finance assets.

Summary

Overall, the results of ratios show that the company is profitable in its business operations and can generate a decent return on the investments made by investors. However, creditors have more stake in the assets of the company.

D. LAZ INCOME AND MARKET

LAZ INC AND MARKET

  Total Revenue Revenues, net of int expense Inc before inc taxes Net Income Intrinsic Value Market Cap
2011 1,919,638,000 1,829,512,000 235,499,000 174,917,000 1,377,240,000 3,680,180,000
2012 1,994,013,000 1,912,448,000 123,885,000 84,309,000 1,415,130,000 3,444,000,000
2013 2,064,733,000 1,985,352,000 216,807,000 160,212,000 2,237,800,000 5,472,000,000
2014 2,363,017,000 2,300,447,000 519,465,000 427,277,000 2,935,940,000 6,492,000,000
2015 2,404,767,000 2,353,608,000 -16,620,000 986,373,000 5,713,680,000 5,841,000,000
2016 2,383,663,000 2,235,055,000 517,461,000 387,698,000 6,220,410,000 5,064,000,000
2017 2,510,967,000 2,458,617,000 569,281,000 428,428,000 6,096,720,000 5,333,000,000

Facts

  • The current revenue is $2.5 billion; grown 31 percent from 2011.
  • The revenue net of interest expense was $2.46 billion; grown 24 percent from 2011.
  • Income before income taxes was $569 million; grown 142 percent from 2011.
  • Net income was $428 million; grown 145 percent in six years.
  • The current intrinsic value was $6.1 billion; grown 343 percent in six years.
  • Market capitalization was $5.3 billion; grown 45 percent in six years.

Explanation

  • Revenue is interest and dividend income.
  • Interest expense is approximately 2 percent of total revenue.
  • And the income before income taxes is 23 percent of total revenue.
  • Likewise, net income is 17 percent of the total revenue.
  • On the other hand, the Intrinsic value is increasing year-over-year at an average of 32 percent.
  • Moreover, the growth in market capitalization year-over-year was 9 percent.

Interpretation

The income statement of LAZ shows that the company is capable of generating sufficient income for its daily operation. Moreover, in 2016 and 2017 shows that the stock of LAZ is undervalued.

Summary

LAZ is efficient in generating sufficient revenue and earnings for its operations. It indicates that the company is profitable and financially stable.

E. LAZ KEY EXECUTIVE COMPENSATION

LAZ KEY EXEC COMPENSATION

  Key Executive Compensation Chairman and CEO – Kenneth M. Jacobs CEO of Lazard Asset Management – Ashish Bhutani COO and CEO, Fianancial Advisory – Alexander F. Stern General Counsel – Scott D. Hoffman
2011 40,684,344 12,461,056 11,985,709 5,238,088 3,878,514
2012 30,647,351 8,842,195 9,681,715 4,718,605 3,495,131
2013 29,836,142 8,615,321 9,628,768 4,689,013 3,255,326
2014 33,987,277 9,992,527 10,486,058 5,878,981 3,682,299
2015 37,363,585 11,679,538 10,443,083 6,806,199 4,064,935
2016 36,239,177 11,641,070 9,543,515 6,945,432 4,017,627

Facts:

  • The key executive compensation was $36 million.
  • The Chairman and CEO compensation are $ 11.6 million.
  • And the CEO of Lazard Asset Management compensation was $9.5 million.
  • In addition, the COO and CFO Financial Advisory compensation were $6.9 million.
  • Moreover, the General Counsel compensation was $4 million.

Explanation

  • The key executive compensation represents 1.5 percent of the total revenue.
  • The Chairman and CEO compensation represent 32 percent of the total key executive compensation.
  • And the CEO of Lazard Asset Management compensation represents 26 percent of the total key executive compensation.
  • While the COO and CFO Financial Advisory compensation represent 19 percent of the total key executive compensation.
  • And the General Counsel compensation represents  11 percent of the total key executive compensation.

Interpretation

The key executive compensation is composed of basic salary, bonus, restricted stock award, and other compensation.

Summary

Laz is paying its key executives a decent salary plus incentives and benefits.

 

F. LAZ LOBBYING AND CONTRIBUTIONS

LAZ LOBBY

  2012 2013 2014 2015 2016
Lobbying 0 630,000 610,000 560,000 360,000
Contributions 673,094 0 577,526 0 568,632

Facts

  • The company spent lobbying year-over-year, and in 2016 lobbying was $360,000.
  • Likewise, LAZ spent contributions and in 2016 contributions was $568.632.

Explanation

  • LAZ lobbying is spending made to candidates like Hillary Clinton and many others.
  • In addition, the contributions of $568,632 are composed of the following:
    • Contributions to candidates                           $351,148
    • Contribution to Leadership PACs                        7,900
    • Contributions to parties                                     183,584
    • Contributions to outside spending groups      26,000

Interpretations

Lazard is spending approximately 2 percent of revenue in lobbying and 2 percent of revenue in contributions.

Summary

Annually the company is spending lobbying to candidates and other figures. The company’s highest spending on lobbying was in 2009 in approximately $1 million.

G. LAZ FINANCIAL STRENGTH

LAZ FINANCIAL STRENGTH

  2011 2012 2013 2014 2015 2016 2017 2018
Score 2.99 2.81 3.68 4.12 3.09 2.91 2.98 3.05

Facts

  • The calculated score in 2011 was 2.99.
  • In 2012 score was 2.81.
  • And in 2013 score was 3.68.
  • Likewise in 2014 score was 4.12.
  • While in 2015 score was 3.09
  • Moreover, in 2016 score was 2.91
  • Future score for 2017 was 2.98
  • Finally, the future score in 2018 was 3.05

Explanation

Lazard has an erratic score from 2011. A score of above 1.8 to 3 indicates that the company might be headed to bankruptcy and a score of above 3 is considered financially stable.

Interpretation

The future score in 2018 is based on the current trend movement in 2017. It shows from 2016 to 2017 there was an upward trend in the score, therefore, the future score is up at the same ratio.

Summary

Multiple financial ratios were combined to form the score, it is a gauge of the company’s financial strength and the likelihood of bankruptcy. It indicates that LAZ is considered financially stable, although, the score in 2017 fall less than 3. The score went up from 2016, therefore, the future score is based on the current trend.

Overview

Lazard is generating sufficient cash revenue for the business operation. The company was able to purchase properties, plant, and equipment for the operations. Moreover, the company was able to pay their long-term debt, repurchase treasury stock and cash dividend payments. Above all, free cash flow is growing.

Further, Lazard is liquid and capable of paying its short-term financial obligations using its cash and cash equivalents. Although its liability/equity ratio is 72/28 percent, respectively. Meaning, LAZ is using more of borrowed funds in its capital structures. In other words, creditors have more stake in the assets of the company than the investors. In addition, total assets, retained earnings and equity were increasing year-over-year from 2012.

Furthermore,

The company shows profitability in its business operations and can generate a decent return on the investments made by investors. Moreover, the company is efficient in generating sufficient revenue and earnings for its operations. It indicates that the company is profitable and financially stable.

In addition, LAZ is paying its key executives a decent salary plus incentives and benefits. Further, the financial strength indicates that LAZ is considered financially stable, although, the score in 2017 fall less than 3, and the score went up from 2016, as a result, the future score is based on the current trend.

CITATION

https://www.sec.gov/Archives/edgar/

http://financials.morningstar.com/income-statement/is.html?t=LAZ

https://www.opensecrets.org/orgs/summary.php?id=D000035294&cycle=2016

Researched and Written by Criselda

Twitter: criseldarome

Note:

Research Reports can be found under the company tab.