Reviewing LegalZoom.com (LZ) & Its Peers

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

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 Recommendations

This is a summary of current recommendations for LegalZoom.com and its competitors, 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 price target 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 possible upside, analysts clearly believe LegalZoom.com is more favorable than its competitors.

Insider & Institutional 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 company insiders. Comparatively, 17.1% of shares of all “Professional Services” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility and Risk

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

Profitability

This table compares LegalZoom.com and its competitors’ 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%

Earnings and Valuation

This table compares LegalZoom.com and its competitors revenue, earnings per share 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 competitors have higher revenue and earnings than LegalZoom.com. LegalZoom.com is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Summary

LegalZoom.com competitors 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.