LegalZoom.com (LZ) shares have been showing interesting moves recently, with the stock gaining nearly 40% over the past year. Investors may be tracking these shifts as the company continues to grow its business.
LegalZoom.com’s strong 39.4% total shareholder return over the past year stands out, due to building momentum and renewed optimism around its path to profitability. The stock’s nearly 20% share price return in the last three months suggests recent buyers are betting on its growth story picking up pace.
But with shares approaching analysts’ price targets and solid gains already logged, investors face a key question: Is LegalZoom.com still undervalued, or is the market already reflecting its future growth prospects?
Advertisement
Most Popular Narrative: 14.4% Undervalued
With the current closing price well below the consensus fair value, LegalZoom.com is catching attention for its rapid business transformation and potential upside. The most popular narrative links LegalZoom's valuation to high-margin offerings, tech partnerships, and scalable growth.
"Strong momentum in high-margin, recurring subscription offerings, especially within compliance and concierge do-it-for-me products, signals continued growth in predictable revenues and improved customer retention. This directly supports higher net margins and earnings stability. Enhanced automation and AI deployment throughout the business is driving operating efficiency gains and enabling scalable delivery of higher-touch services, which underpins continued EBITDA margin expansion and a reduced cost structure."
Want to know what is powering these big moves? The narrative’s future valuation depends on ambitious profit margin expansion and bold recurring revenue bets. Which game-changing assumptions are driving the consensus target? Uncover the specifics that could be shaping LegalZoom's fair value call.
However, intensifying competition in online legal services and regulatory scrutiny could quickly challenge LegalZoom’s optimistic growth and margin assumptions.
Another View: Price-to-Earnings Paints a Different Picture
While analyst price targets and narratives suggest LegalZoom.com is undervalued, the market’s price-to-earnings ratio tells a contrasting story. The stock trades at 62.5x, far above its industry peers at 25.4x and the fair ratio of 31.5x. This wide gulf could signal valuation risk, especially if growth expectations do not materialize. Is the optimism already priced in, or could momentum keep carrying the shares higher?
If you think there’s more behind LegalZoom.com’s story or want to dig into the numbers yourself, you can easily craft your own take in just a few minutes. Do it your way
A great starting point for your LegalZoom.com research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
Looking for More Investment Ideas?
Don’t let opportunity pass you by. If you want to get ahead of the market, these unique ideas from Simply Wall Street’s screener give you an edge.
This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.
New: AI Stock Screener & Alerts
Our new AI Stock Screener scans the market every day to uncover opportunities.
• Dividend Powerhouses (3%+ Yield) • Undervalued Small Caps with Insider Buying • High growth Tech and AI Companies
