Legalzoom.Com, Inc. (NASDAQ: LZ)

Sector: Industrials Industry: Specialty Business Services CIK: 0001286139
Market Cap 1.09 Bn
P/B 5.39
P/E 49.00
P/S 1.50
ROIC (Qtr) 6.45
Div Yield % 0.00
Rev 1y % (Qtr) 12.79
Total Debt (Qtr) 14.68 Mn
Debt/Equity (Qtr) 0.07
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About

LegalZoom.com, Inc., often recognized by the stock symbol LZ, operates in the legal services industry within the United States. As a leading online platform for business formation, LegalZoom offers an array of products and services designed to cater to the legal and compliance needs of small businesses across all 50 states. The company's primary business activities revolve around providing comprehensive legal, tax, accounting, and compliance products and expertise through an easy-to-use technology platform. LegalZoom's reach extends beyond the...

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Investment thesis

Bull case

  • Strong operating cash flow of 186.65M provides robust 12.72x coverage of total debt 14.68M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 237.15M provide 55.80x coverage of short-term debt 4.25M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 391.20M provides 26.66x coverage of total debt 14.68M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 186.65M provides exceptional 266.65x coverage of interest expenses 700000, showing strong debt service capability.
  • Robust free cash flow of 155.80M exceeds capital expenditure of 30.85M by 5.05x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 186.65M barely covers its investment activities of (40.76M), with a coverage ratio of -4.58, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (40.76M) provide weak support for R&D spending of 79.09M, which is -0.52x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 237.15M provide limited coverage of acquisition spending of (11.42M), which is -20.77x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 186.65M provides insufficient coverage of deferred revenue obligations of 214.11M, which is 0.87x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of 186.65M shows concerning coverage of stock compensation expenses of 110.79M, with a 1.68 ratio indicating potential earnings quality issues.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Specialty Business Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 CTAS Cintas Corp 120.08 Bn 556.91 33.85 3.24 Bn
2 RELX Relx Plc 56.19 Bn 20.01 4.34 9.82 Bn
3 TRI Thomson Reuters Corp /Can/ 37.42 Bn 24.91 5.00 2.44 Bn
4 CPRT Copart Inc 36.25 Bn 22.74 7.79 0.10 Bn
5 RBA Rb Global Inc. 19.20 Bn 49.09 4.24 4.21 Bn
6 ULS UL Solutions Inc. 14.12 Bn 43.32 4.92 0.74 Bn
7 GPN Global Payments Inc 11.52 Bn 284.78 8.66 16.20 Bn
8 ARMK Aramark 10.37 Bn 32.72 0.55 6.57 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.61 2.48
EV to Cash from Ops. EV/CFO 4.75 30.22
EV to Debt EV to Debt 60.39 31.08
EV to EBIT EV/EBIT 28.04 94.66
EV to EBITDA EV/EBITDA 12.50 18.37
EV to Free Cash Flow [EV/FCF] EV/FCF 5.69 -20.73
EV to Market Cap EV to Market Cap 0.81 178.66
EV to Revenue EV/Rev 1.22 8.12
Price to Book Value [P/B] P/B 5.39 5.37
Price to Earnings [P/E] P/E 49.00 65.19
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 -15,800.59
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 10.14
Dividend per Basic Share Div per Share (Qtr) 0.00 0.35
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 7.65
Interest Coverage Int. cover (Qtr) 45.16 30.46
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 17.43 -178.22
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 110.85 155.14
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 5.38
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -8.31 -34.92
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 9.95 -86.28
EBIT Growth (1y) % EBIT 1y % (Qtr) -24.03 -22.62
EBT Growth (1y) % EBT 1y % (Qtr) -24.81 -287.35
EPS Growth (1y) % EPS 1y % (Qtr) 0.00 -118.47
FCF Growth (1y) % FCF 1y % (Qtr) 99.27 -146.43
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 9.55 2.63
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.32 0.84
Cash Payout Ratio Cash Payout (Qtr) 0.00 -0.03
Cash Ratio Cash Ratio (Qtr) 0.72 1.15
Current Ratio Curr Ratio (Qtr) 0.85 4.12
Debt to Equity Ratio Debt/Equity (Qtr) 0.07 0.92
Interest Cover Ratio Int Coverage (Qtr) 45.16 30.46
Times Interest Earned Times Interest Earned (Qtr) 45.16 30.46
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 10.60 -33.89
EBIT Margin % EBIT Margin % (Qtr) 4.35 -43.32
EBT Margin % EBT Margin % (Qtr) 4.25 -44.88
Gross Margin % Gross Margin % (Qtr) 65.70 39.81
Net Profit Margin % Net Margin % (Qtr) 3.10 -41.60