Contrasting Financial Engines (FNGN) & Lazard (LAZ)

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

Analyst Ratings

This is a summary of recent ratings and target prices for Financial Engines and Lazard, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Financial Engines 0 6 0 0 2.00
Lazard 0 1 7 0 2.88

Financial Engines presently has a consensus price target of $38.67, suggesting a potential downside of 13.98%. Lazard has a consensus price target of $60.29, suggesting a potential upside of 24.79%. Given Lazard’s stronger consensus rating and higher possible upside, analysts plainly believe Lazard is more favorable than Financial Engines.

Profitability

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

Net Margins Return on Equity Return on Assets
Financial Engines 10.53% 8.80% 8.12%
Lazard 11.58% 47.49% 12.07%

Dividends

Financial Engines pays an annual dividend of $0.32 per share and has a dividend yield of 0.7%. Lazard pays an annual dividend of $1.76 per share and has a dividend yield of 3.6%. Financial Engines pays out 31.1% of its earnings in the form of a dividend. Lazard pays out 46.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Lazard has raised its dividend for 7 consecutive years. Lazard is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

99.8% of Financial Engines shares are held by institutional investors. Comparatively, 73.2% of Lazard shares are held by institutional investors. 3.0% of Financial Engines shares are held by insiders. Comparatively, 2.8% of Lazard shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk and Volatility

Financial Engines has a beta of 1.46, meaning that its stock price is 46% more volatile than the S&P 500. Comparatively, Lazard has a beta of 1.83, meaning that its stock price is 83% more volatile than the S&P 500.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Financial Engines $480.51 million 5.96 $46.66 million $1.03 43.64
Lazard $2.70 billion 2.32 $253.58 million $3.78 12.78

Lazard has higher revenue and earnings than Financial Engines. Lazard is trading at a lower price-to-earnings ratio than Financial Engines, indicating that it is currently the more affordable of the two stocks.

Summary

Lazard beats Financial Engines on 12 of the 17 factors compared between the two stocks.

Financial Engines Company Profile

Financial Engines, Inc. provides independent technology-enabled financial advisory, discretionary portfolio management, personalized investment advice, financial and retirement income planning, and financial education and guidance services in the United States. It assists individuals to develop a strategy to reach financial goals by offering a set of services, including personalized plans for saving and investing, assessments of retirement income, and the option to meet face-to-face with a financial advisor. The company's products and services include Professional Management that provides discretionary portfolio management service for individuals in the workplace who want affordable and personalized portfolio management for their retirement accounts; Personal Advisor, which offers discretionary portfolio management for 401(k), IRA, and taxable accounts for defined contribution (DC) plan participants and individual retail investors; and Online Advice, an Internet-based investment advisory service designed for individuals who wish to take an active role in personally managing their portfolios. Its products and services also comprise Financial Planning and Retirement Income Planning services, including social security guidance; and Financial Wellness, which offers a range of financial education and guidance through multiple channels, including in person, on-site events, online content, and phone-based advisors. The company delivers its services to plan sponsors and plan participants primarily through connections to nine DC plan providers. Financial Engines, Inc. was founded in 1996 and is headquartered in Sunnyvale, California.

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.

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