Lazard (NASDAQ: MORN) and Morningstar (NASDAQ:MORN) are both mid-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, valuation, profitability, risk, dividends, earnings and institutional ownership.

Risk & Volatility

Lazard has a beta of 1.83, meaning that its share price is 83% more volatile than the S&P 500. Comparatively, Morningstar has a beta of 0.79, meaning that its share price is 21% less volatile than the S&P 500.

Valuation and Earnings

This table compares Lazard and Morningstar’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lazard $2.70 billion 2.36 $253.58 million $3.78 12.96
Morningstar $911.70 million 6.41 $136.90 million N/A N/A

Lazard has higher revenue and earnings than Morningstar.

Dividends

Lazard pays an annual dividend of $1.76 per share and has a dividend yield of 3.6%. Morningstar pays an annual dividend of $1.00 per share and has a dividend yield of 0.7%. Lazard pays out 46.6% of its earnings in the form of a dividend. Lazard has increased its dividend for 7 consecutive years and Morningstar has increased its dividend for 6 consecutive years. Lazard is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

73.2% of Lazard shares are held by institutional investors. Comparatively, 37.9% of Morningstar shares are held by institutional investors. 2.8% of Lazard shares are held by company insiders. Comparatively, 57.5% of Morningstar shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Lazard and Morningstar’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lazard 11.58% 47.49% 12.07%
Morningstar 16.15% 17.53% 10.28%

Analyst Ratings

This is a summary of current ratings and price targets for Lazard and Morningstar, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lazard 0 1 7 0 2.88
Morningstar 0 0 0 0 N/A

Lazard presently has a consensus target price of $60.29, indicating a potential upside of 23.08%. Given Lazard’s higher possible upside, analysts plainly believe Lazard is more favorable than Morningstar.

Summary

Lazard beats Morningstar on 10 of the 15 factors compared between the two stocks.

Lazard Company Profile

Lazard Ltd, together with its subsidiaries, operates as a financial advisory and asset management firm worldwide. Its Financial Advisory segment offers various financial advisory services regarding mergers and acquisitions and other strategic matters, restructurings, capital structure, capital raising, shareholder advisory, and various other financial matters. This segment serves corporate, partnership, institutional, government, sovereign, and individual clients. The company's Asset Management segment offers a range of investment solutions and investment management services in equity and fixed income strategies; and alternative investments and private equity funds to corporations, public funds, sovereign entities, endowments and foundations, labor funds, financial intermediaries, and private clients. Lazard Ltd was founded in 1848 and is based in Hamilton, Bermuda.

Morningstar Company Profile

Morningstar, Inc. provides independent investment research services in North America, Europe, Australia, and Asia. It offers a line of data, research, and software tools on a range of investment offerings, including managed investment products, publicly listed companies, fixed income securities, private capital markets, and real-time global market data for financial advisors, asset managers, retirement plan providers and sponsors, and individual and institutional investors. The company offers Morningstar Data, an investment data spanning various investment databases, including pricing and commodity data; Morningstar Direct, an institutional investment research platform; investment management solutions, which include Morningstar Managed Portfolios, the strategist models on third-party managed account platforms, as well as services for institutional asset management, asset allocation, and manager selection; institutional asset management services for asset management firms, broker-dealers, and insurance providers; Morningstar Advisor Workstation, a Web-based investment planning system; and Morningstar.com, a Website for individual investors. It also provides Morningstar Enterprise Components, a set of tools and capabilities that builds customized Websites or enhances existing solutions; Morningstar Research, which includes equity research and manager research; Morningstar Credit Ratings that provides new issue and surveillance ratings and analysis for structured credits, as well as operational risk assessment services; Morningstar Indexes, a set of investment indexes; workplace solutions, such as retirement advice and managed accounts, fiduciary services, and custom models; a mobile application, excel plug-in, data feeds, and data solutions; equity and manager research, and credit rating services; and institutional asset management, asset allocation, and manager selection services. The company was founded in 1984 and is headquartered in Chicago, Illinois.

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