Head to Head Analysis: Lazard (LAZ) & Alcentra Capital (ABDC)

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

Dividends

Lazard pays an annual dividend of $1.76 per share and has a dividend yield of 4.6%. Alcentra Capital pays an annual dividend of $0.72 per share and has a dividend yield of 9.2%. Lazard pays out 42.3% of its earnings in the form of a dividend. Alcentra Capital pays out 71.3% 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 increased its dividend for 8 consecutive years.

Insider & Institutional Ownership

68.7% of Lazard shares are owned by institutional investors. Comparatively, 29.8% of Alcentra Capital shares are owned by institutional investors. 2.9% of Lazard shares are owned by company insiders. Comparatively, 0.6% of Alcentra Capital shares are owned 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 Alcentra Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lazard 18.27% 50.62% 11.32%
Alcentra Capital 19.06% 9.24% 5.15%

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lazard $2.88 billion 1.72 $527.13 million $4.16 9.19
Alcentra Capital $28.97 million 3.49 $5.52 million $1.01 7.77

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Lazard and Alcentra Capital, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lazard 1 3 1 0 2.00
Alcentra Capital 0 0 0 0 N/A

Lazard presently has a consensus target price of $48.40, suggesting a potential upside of 26.67%. Given Lazard’s higher possible upside, equities analysts clearly believe Lazard is more favorable than Alcentra Capital.

Risk & Volatility

Lazard has a beta of 1.59, meaning that its stock price is 59% more volatile than the S&P 500. Comparatively, Alcentra Capital has a beta of 0.58, meaning that its stock price is 42% less volatile than the S&P 500.

Summary

Lazard beats Alcentra Capital on 13 of the 16 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.

Alcentra Capital Company Profile

Alcentra Capital Corporation is a business development company specializing in investments in lower middle-market companies. The fund seeks to invest in healthcare, business services, defense, government services, telecom and technology, media, infrastructure maintenance and logistics, and oil and gas services sector. It focuses on investment opportunities headquartered in the United States. The fund seeks to invest $5 million to $15 million per transaction in companies with EBITDA between $5 million to $15 million and revenues of between $10 million and $100 million. It invests in the form of subordinated debt and, to a lesser extent, senior debt and minority equity investments.

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