Lazard

Lazard Inc is assigned a 5-star quantitative star rating, indicating our belief that this share class offers a compelling opportunity for investors. The stock currently trades at a 25% discount to our quantitative fair value estimate of $47.18 per share; however, some caution is warranted due to this estimate's medium uncertainty rating.

The firm's profitability increases our quantitative valuation. Highly profitable companies are often more resilient in recessions and are likely to generate stronger future cash flows for shareholders. For example, the firm's enterprise value to free cash flow ratio of 5.4 falls in the bottom 10% compared with global peers. This can be a sign of operational efficiency and potential for the company to fund growth, pay dividends, or reduce debt without needing additional capital. We believe this is a sign that shares could be cheap.

The company's valuation metrics are an additional encouraging factor. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. The firm's enterprise value to market value ratio of 1.3, for example, sits in the top 40% compared with global peers. While highly leveraged firms can be risky, they can also be highly rewarding. This company's high enterprise value relative to its market value suggests that wise investments will yield outsize returns for investors. This characteristic further promotes our favorable price/fair value ratio.

In addition to the aforementioned drivers, our model considers momentum as part of its comprehensive analysis. This share class has been a laggard relative to the broader universe over the past year. This underperformance makes the stock appear cheap, which portends a buying opportunity in light of other contributors to our model.

The company's narrow quantitative moat rating indicates it could outearn its cost of capital and maintain robust margins for 10 years or longer. In addition, the company's moderate financial health score is decent and doesn't seriously concern us with regard to financial distress.