Overall LZ gets a fundamental rating of 5 out of 10. We evaluated LZ against 89 industry peers in the Professional Services industry. Both the profitability and the financial health of LZ get a neutral evaluation. Nothing too spectacular is happening here. LZ is growing strongly while it is still valued neutral. This is a good combination!

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

LZ had positive earnings in the past year.
LZ had a positive operating cash flow in the past year.
In multiple years LZ reported negative net income over the last 5 years.
LZ had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

LZ has a Return On Assets (4.03%) which is in line with its industry peers.
LZ's Return On Equity of 11.01% is in line compared to the rest of the industry. LZ outperforms 59.55% of its industry peers.
With a Return On Invested Capital value of 4.03%, LZ perfoms like the industry average, outperforming 47.19% of the companies in the same industry.

		Industry Rank	Sector Rank
ROA	4.03%
ROE	11.01%
ROIC	4.03%

ROA(3y)-0.29%

ROA(5y)-4.65%

ROE(3y)2.06%

ROE(5y)N/A

ROIC(3y)N/A

ROIC(5y)N/A

1.3 Margins

The Profit Margin of LZ (3.05%) is comparable to the rest of the industry.
LZ's Profit Margin has improved in the last couple of years.
LZ's Operating Margin of 1.57% is in line compared to the rest of the industry. LZ outperforms 41.57% of its industry peers.
In the last couple of years the Operating Margin of LZ has declined.
LZ has a Gross Margin of 65.69%. This is amongst the best in the industry. LZ outperforms 83.15% of its industry peers.
In the last couple of years the Gross Margin of LZ has remained more or less at the same level.

		Industry Rank	Sector Rank
OM	1.57%
PM (TTM)	3.05%
GM	65.69%

OM growth 3YN/A

OM growth 5Y-16.69%

PM growth 3YN/A

PM growth 5Y27.15%

GM growth 3Y-1.14%

GM growth 5Y-0.51%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

LZ has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for LZ has been reduced compared to 1 year ago.
Compared to 5 years ago, LZ has less shares outstanding
The debt/assets ratio for LZ has been reduced compared to a year ago.

2.2 Solvency

Based on the Altman-Z score of 1.20, we must say that LZ is in the distress zone and has some risk of bankruptcy.
The Altman-Z score of LZ (1.20) is worse than 66.29% of its industry peers.
There is no outstanding debt for LZ. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.

		Industry Rank	Sector Rank
Debt/Equity	0
Debt/FCF	0
Altman-Z	1.2

ROIC/WACC0.45

WACC8.9%

2.3 Liquidity

LZ has a Current Ratio of 0.84. This is a bad value and indicates that LZ is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 0.84, LZ is doing worse than 80.90% of the companies in the same industry.
A Quick Ratio of 0.84 indicates that LZ may have some problems paying its short term obligations.
LZ has a worse Quick ratio (0.84) than 80.90% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	0.84
Quick Ratio	0.84

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 30.61% over the past year.
The Earnings Per Share has been growing by 40.44% on average over the past years. This is a very strong growth
Looking at the last year, LZ shows a small growth in Revenue. The Revenue has grown by 7.17% in the last year.
The Revenue has been growing by 10.80% on average over the past years. This is quite good.

EPS 1Y (TTM)30.61%

EPS 3YN/A

EPS 5Y40.44%

EPS Q2Q%0%

Revenue 1Y (TTM)7.17%

Revenue growth 3Y5.84%

Revenue growth 5Y10.8%

Sales Q2Q%12.79%

3.2 Future

The Earnings Per Share is expected to grow by 12.68% on average over the next years. This is quite good.
Based on estimates for the next years, LZ will show a quite strong growth in Revenue. The Revenue will grow by 11.98% on average per year.

EPS Next Y17.07%

EPS Next 2Y14.62%

EPS Next 3Y12.4%

EPS Next 5Y12.68%

Revenue Next Year10.23%

Revenue Next 2Y8.58%

Revenue Next 3Y7.64%

Revenue Next 5Y11.98%

3.3 Evolution

The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 14.25 indicates a correct valuation of LZ.
78.65% of the companies in the same industry are more expensive than LZ, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 28.41, LZ is valued a bit cheaper.
The Price/Forward Earnings ratio is 12.62, which indicates a correct valuation of LZ.
Compared to the rest of the industry, the Price/Forward Earnings ratio of LZ indicates a somewhat cheap valuation: LZ is cheaper than 78.65% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 25.64. LZ is valued rather cheaply when compared to this.

		Industry Rank	Sector Rank
PE	14.25
Fwd PE	12.62

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of LZ is on the same level as its industry peers.
Based on the Price/Free Cash Flow ratio, LZ is valued cheaper than 89.89% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	10.38
EV/EBITDA	24.58

4.3 Compensation for Growth

LZ's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
LZ's earnings are expected to grow with 12.40% in the coming years. This may justify a more expensive valuation.