LegalZoom.com Inc. Common Stock (LZ)

FairStock Score: 26/100 — RISKY

Key Financials

Strengths

• Generates $199 million in annual free cash flow (18.0% yield on market cap)
• Strong Piotroski F-Score of 7/9 indicating robust financial health across profitability, leverage, and efficiency metrics
• Solid return on equity of 11.6% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.08, providing financial flexibility
• Revenue growth of 17.7% demonstrates strong top-line momentum

Concerns

• Trades significantly above Graham Number ($1) with negative 373% margin of safety—limited downside protection
• Altman Z-Score of -0.9 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

LegalZoom.com Inc. Common Stock is a micro-cap industrials company valued at $1.1 billion. The business generates $756 million in annual revenue with a 0.8% net margin and $199 million in free cash flow. From a quality standpoint, LegalZoom.com shows solid Piotroski F-Score of 7/9 and distressed Altman Z-Score of -0.9 warrants caution. On valuation, the stock is commanding a steep 78.1x multiple, with trades far above its Graham Number ($1) with no margin of safety. Growth dynamics show revenue growing at 17.7% and profit growth of -52.9%. Our composite FairStock Score of 26/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

LegalZoom.com's 18% revenue growth trajectory could accelerate as it captures additional market share in the industrials sector. With $199 million in annual free cash flow (18.0% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 78x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer