Analyzing LegalZoom.com (LZ) and Its Peers

LegalZoom.com (NASDAQ:LZ) is one of 203 publicly-traded companies in the “Professional Services” industry, but how does it weigh in compared to its peers? We will compare LegalZoom.com to similar companies based on the strength of its risk, institutional ownership, valuation, analyst recommendations, dividends, profitability and earnings.

Institutional and Insider Ownership

82.0% of LegalZoom.com shares are held by institutional investors. Comparatively, 57.4% of shares of all “Professional Services” companies are held by institutional investors. 7.4% of LegalZoom.com shares are held by insiders. Comparatively, 17.1% of shares of all “Professional Services” companies are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk and Volatility

LegalZoom.com has a beta of 1.16, indicating that its stock price is 16% more volatile than the S&P 500. Comparatively, LegalZoom.com’s peers have a beta of 0.97, indicating that their average stock price is 3% less volatile than the S&P 500.

Dividends

LegalZoom.com pays an annual dividend of $1.44 per share and has a dividend yield of 29.7%. LegalZoom.com pays out 1,200.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Professional Services” companies pay a dividend yield of 2.5% and pay out -139.0% of their earnings in the form of a dividend.

Analyst Ratings

This is a summary of recent ratings for LegalZoom.com and its peers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LegalZoom.com	4	5	0	0	1.56
LegalZoom.com Competitors	1591	6477	9184	432	2.48

LegalZoom.com currently has a consensus target price of $7.10, suggesting a potential upside of 46.39%. As a group, “Professional Services” companies have a potential upside of 27.28%. Given LegalZoom.com’s higher probable upside, equities analysts clearly believe LegalZoom.com is more favorable than its peers.

Valuation and Earnings

This table compares LegalZoom.com and its peers revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
LegalZoom.com	$797.48 million	$15.43 million	40.42
LegalZoom.com Competitors	$3.39 billion	$228.39 million	32.71

LegalZoom.com’s peers have higher revenue and earnings than LegalZoom.com. LegalZoom.com is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Profitability

This table compares LegalZoom.com and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LegalZoom.com	2.56%	23.63%	7.07%
LegalZoom.com Competitors	0.21%	36.55%	4.39%

Summary

LegalZoom.com peers beat LegalZoom.com on 8 of the 15 factors compared.

LegalZoom.com Company Profile

LegalZoom.com, Inc., together with its subsidiaries, operates an online platform that supports the legal, compliance, and business management needs of small businesses and consumers in the United States. The company’s platform offers business formation products, such as limited liability company, incorporation of C and S corporations, nonprofit formations, doing-business-as, corporate changes and filings, business licenses, legal forms, and beneficial ownership information reports; intellectual property products consisting of trademark and patent applications, and copyright registrations; and tax services, including business and personal tax preparations. It also provides consumer, estate planning, and other services comprising last will and testament, living will, living trust, power of attorney, and name change. In addition, the company offers subscriptions services, including registered agent, compliance, attorney advice, tax advice and preparation, eSignature, virtual mail and check deposit services, trademark monitoring, and estate planning bundle. The company was incorporated in 1999 and is headquartered in Mountain View, California.