Stock Analysis & Valuation Rothschild & Co SCA (ROTH.PA)

• Previous Close: €38.35
• Sector Valuation Confidence Level: High

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	46.30	21
Graham Formula	81.40	112

Strategic Investment Analysis

Company Overview

Rothschild & Co SCA is a globally recognized financial services firm headquartered in Paris, France, with a storied history dating back to 1838. The company operates across three core business segments: advisory (mergers & acquisitions, restructuring, and equity advisory), wealth and asset management (serving high-net-worth individuals, institutions, and intermediaries), and merchant banking (private equity, credit, and fund solutions). With a presence in key financial hubs like the UK, Switzerland, the Americas, and Asia, Rothschild & Co leverages its deep industry expertise and long-standing relationships to serve corporations, governments, and private clients. The firm’s reputation for discretion and tailored financial solutions positions it as a trusted partner in complex transactions and wealth preservation. As a mid-sized player in the capital markets sector, Rothschild & Co differentiates itself through its boutique approach, combining global reach with personalized service.

Investment Summary

Rothschild & Co presents a stable investment case with its diversified revenue streams, strong brand equity, and conservative balance sheet (€2.52B cash vs. €822M debt). The firm’s advisory business benefits from recurring deal flow, while wealth management provides steady fee income. However, reliance on cyclical investment banking activity and merchant banking exposes it to market volatility, as seen in negative operating cash flow (-€3.18B in FY2022). The stock’s low beta (0.77) suggests defensive characteristics, and a €1.40/share dividend offers modest yield. Risks include competition from larger bulge-bracket banks and potential fee compression in asset management.

Competitive Analysis

Rothschild & Co competes in a niche segment of the financial services industry, combining boutique advisory with private client services. Its competitive advantage lies in its brand legacy, independence (avoiding conflicts of interest common at universal banks), and focus on mid-market transactions where larger players may lack agility. The firm’s advisory division competes with elite M&A boutiques like Lazard, while its wealth management arm faces pressure from Swiss private banks and global asset managers. Merchant banking activities, though smaller in scale, benefit from proprietary deal flow via advisory relationships. However, Rothschild lacks the balance sheet strength of bulge-bracket competitors (e.g., Goldman Sachs) for large-scale underwriting or lending. Its European-centric revenue base (vs. U.S.-dominated peers) may limit growth in higher-margin markets. The firm’s differentiation hinges on high-touch service and cross-selling opportunities between advisory and private clients.

Major Competitors

• Lazard Ltd (LAZ): Lazard is a pure-play advisory and asset management firm with a stronger U.S. presence than Rothschild. Its larger scale (market cap ~$3.5B) and focus on restructuring give it an edge in crisis advisory, but it lacks Rothschild’s integrated merchant banking capabilities. Lazard’s asset management arm is more institutionalized, while Rothschild emphasizes ultra-high-net-worth clients.
• EFG International AG (EFG.SW): EFG is a Swiss private banking competitor with a similar focus on wealthy families but without Rothschild’s advisory or merchant banking verticals. It has stronger emerging markets exposure but lacks the brand cachet and deal-making network of Rothschild.
• The Goldman Sachs Group, Inc. (GS): Goldman dominates global M&A and asset management with far greater scale and capital markets capabilities. However, Rothschild’s independence avoids conflicts in advisory work, and its boutique model is preferred by some mid-market clients seeking tailored solutions over Goldman’s institutional approach.
• UBS Group AG (UBSG.SW): UBS is a wealth management giant with a global footprint that overshadows Rothschild’s private client business. However, Rothschild’s integration with advisory services offers unique synergies for entrepreneurial clients, while UBS’s recent Credit Suisse acquisition may dilute focus.